Which of the following statements is correct about the difference between contribution margin and gross margin?
A)Contribution margin and gross margin are equivalent.
B)Contribution margin is the difference between sales revenue and cost of goods sold.
C)Gross margin is the difference between sales revenue and variable costs.
D)Gross margin is used for external reporting,while contribution margin is used for internal reporting.

Question

Quizplus · Accepted Answer

Gross margin, calculated as sales revenue minus cost of goods sold, is a key figure in external financial reporting, reflecting a company's efficiency in producing its goods. Contribution margin, on the other hand, subtracts all variable costs from sales revenue and is primarily used internally to make decisions about pricing, production, and product lines.

Which of the Following Statements Is Correct About the Difference