ECONOMICS

Detailed explanation-1: -Contribution margin is the amount of revenue remaining after deducting variable costs. It is identified in a CVP income statement, which classifies costs as variable or fixed. It can be expressed as a total amount, as a per unit amount, or as a ratio.

Detailed explanation-2: -The contribution margin. represents sales revenue left over after deducting variable costs from sales. It is the amount remaining that will contribute to covering fixed costs and to operating profit (hence, the name contribution margin).

Detailed explanation-3: -Gross profit is your income or sales less cost of goods sold (COGS), which are all fixed costs (above the line on your income statement). Contribution margin analyzes sales less variable costs, such as commissions, supplies, and other back office expenses (costs listed below the line on the income statement).

Detailed explanation-4: -The answer is b. Contribution margin is the difference between fixed and variable expenses.

Detailed explanation-5: -A contribution margin measures how profitable a product is to produce. A company’s contribution margin shows how much revenue is available after it deducts variable costs like raw materials and transportation expenses.