What will happen to the contribution margin if fixed costs related to a product increase while variable costs and sales price remain constant?
A)Will increase
B)Will not change
C)Will decrease
D)None of the above

Question

Quizplus · Accepted Answer

The contribution margin is calculated as sales revenue minus variable costs. Since it does not take fixed costs into account, an increase in fixed costs while keeping variable costs and sales price constant will not affect the contribution margin.

What Will Happen to the Contribution Margin If Fixed Costs