Which of the following statements about contribution margin and gross margin in CVP analysis is true?
A) Contribution margin equals total revenue minus cost of goods sold.
B) Contribution margin equals total revenue minus non-variable costs.
C) Gross margin equals total revenue minus cost of goods sold.
D) Service companies can compute a gross margin but not a contribution margin.
E) Gross margin equals total revenue minus non-variable costs.

Question

Quizplus · Accepted Answer

Gross margin equals the sales revenue minus cost of goods sold. Contribution margin is calculated as sales revenue minus variable expenses. Non-variable expenses are not considered when calculating contribution margin. Service companies can also compute contribution margin in addition to gross margin.

Which of the Following Statements About Contribution Margin and Gross