A contribution margin is calculated by subtracting variable expenses from sales, and represents the amount of revenue that contributes to covering the ____ expenses of a company.
A) variable
B) fixed
C) tax
D) accounts payable

Question

Quizplus · Accepted Answer

Contribution margin represents the amount of revenue that contributes to covering the fixed expenses of a company. Variable expenses are deducted from sales to determine the contribution margin, and any remaining amount after fixed expenses are covered represents the company's net profit. Tax and accounts payable are not factors in calculating the contribution margin.

A Contribution Margin Is Calculated by Subtracting Variable Expenses from Sales