The difference between total sales in dollars and total variable expenses is called:
A)the net operating income.
B)the contribution margin.
C)the gross margin.
D)the net profit.

Question

Quizplus · Accepted Answer

The difference between total sales in dollars and total variable expenses is called the contribution margin. This represents the amount of revenue that is available to cover fixed costs and provide a profit. The net operating income and net profit are both calculated after fixed expenses are subtracted from the contribution margin. The gross margin, on the other hand, is the difference between total sales and the cost of goods sold (which includes both variable and fixed costs).

The Difference Between Total Sales in Dollars and Total Variable