alleryStart learning →Contribution margin is the amount by which a product's selling price exceeds its total:
AVariable cost per unit
BFixed cost per year
CAdvertising cost paid
DInterest cost owed
Answer & Solution
Correct answer: A. Variable cost per unit
1. Contribution margin measures what each sale contributes.
2. Each unit sold brings in a selling price and incurs a variable cost.
3. Contribution margin is the amount by which selling price exceeds total variable cost per unit.
4. That surplus goes toward covering fixed costs.
_Source: OpenStax Principles of Accounting, Volume 2: Managerial Accounting (CC BY-NC-SA 4.0), Ch 3 'Cost-Volume-Profit Analysis'_
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