Contribution margin is calculated by
A)deducting variable costs and common costs from revenue.
B)deducting variable costs and controllable fixed costs from revenue.
C)deducting variable costs from revenue.
D)deducting fixed costs from revenue.

Question

Quizplus · Accepted Answer

Contribution margin is the amount of revenue that is left over after variable costs are deducted. This contribution margin can then be used to cover fixed costs and generate profit. Therefore, the correct calculation is to deduct only variable costs from revenue to determine the contribution margin.

Contribution Margin Is Calculated by