The dollar amount that provides for covering fixed costs and then provides for operating income is called ________.
A) variable cost
B) total cost
C) contribution margin
D) margin of safety

Question

Quizplus · Accepted Answer

The dollar amount that covers fixed costs and provides for operating income is referred to as contribution margin. Variable cost refers to the costs that vary with the level of production, total cost refers to the sum of fixed and variable costs, and margin of safety refers to the excess of budgeted or actual sales over the break-even volume of sales.

The Dollar Amount That Provides for Covering Fixed Costs and Then