Gross margin is ________.
A) sales revenue less variable costs
B) sales revenue less cost of goods sold
C) contribution margin less fixed costs
D) contribution margin less variable costs

Question

Quizplus · Accepted Answer

Gross margin is often calculated as sales revenue minus cost of goods sold (COGS), which gives the profit made after accounting for the direct costs of producing and delivering the goods or services sold. Option A is calculating contribution margin, which only accounts for variable costs, while Option C is calculating a company's operating income after deducting all fixed costs, not just COGS. Option D is a similar calculation to contribution margin, but typically refers to the profit made after accounting for variable costs only in a particular product or service, not the overall gross margin of a company.

Gross Margin Is ________