What is a contribution margin?
A) the difference between sales and variable costs
B) the difference between fixed and variable costs
C) the difference between sales and committed fixed costs
D) the difference between sales and discretionary fixed costs

Question

Quizplus · Accepted Answer

Contribution margin is the difference between the sales revenue and variable costs. It represents the amount of money that is available to cover fixed costs and contribute to profits. Therefore, option A is the correct answer. Options B, C, and D are incorrect as they either include fixed costs or refer to specific types of fixed costs, which are not relevant to calculating the contribution margin.

What Is a Contribution Margin