In break-even analysis, the contribution margin is defined as
A)price minus variable cost.
B)price minus fixed cost.
C)variable cost minus fixed cost.
D)fixed cost minus variable cost.

Question

Quizplus · Accepted Answer

The contribution margin is defined as the amount of revenue left over after deducting the variable costs associated with producing and selling a product or service. This means that it is calculated as the difference between the product's selling price and the variable costs that are directly incurred in producing and selling that product or service. Hence, the correct option is A, which states that the contribution margin is the price minus the variable cost.

In Break-Even Analysis, the Contribution Margin Is Defined as