If the contribution margin is not sufficient to cover fixed expenses:
A) total profit equals total expenses.
B) contribution margin is negative.
C) a loss occurs.
D) variable expenses equal contribution margin.

Question

Quizplus · Accepted Answer

If the contribution margin is not sufficient to cover fixed expenses, it means that the total revenue earned is not enough to cover both variable and fixed expenses. In this case, a loss occurs because the fixed expenses still need to be paid even if there is not enough revenue to cover them.

If the Contribution Margin Is Not Sufficient to Cover Fixed