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Home > Accounting > Question

What is Contribution Margin:

0
A) Sales - Fixed Cost
B) Profit - Expenses
C) Sales - Variable Cost
D) Revenue - Total Cost

Correct Answer: C) Sales - Variable Cost

• In managerial accounting, the Contribution Margin is precisely calculated as Sales - Variable Cost. • It heavily represents the remaining revenue available to cover all corporate Fixed Costs. • Once all strict fixed costs are fully covered, any remaining contribution directly generates Net Profit. • The specific point where total revenue exactly equals total costs is officially called the Break-even point. • Costs that constantly fluctuate in direct proportion to production volume are Variable costs.

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