Contribution Margin Is

question 44

Multiple Choice

Contribution margin is

• A) the amount of revenue remaining after deducting fixed costs.
• B) available to cover fixed costs and contribute to income for the company.
• C) sales less fixed costs.
• D) unit selling price less unit fixed costs.

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Definitions:

Marginal Revenue

The increased earnings obtained by selling an additional unit of a good or service.

Average Fixed Cost

Unchanging production costs relative to output levels, per unit of output produced.

Average Variable Cost

The total variable cost divided by the quantity of output, representing the variable cost per unit of output.

Average Total Cost

The average total cost (ATC) is an economic concept that calculates the total cost of producing a good or service divided by the quantity of output produced. It is used to determine the per-unit cost of production.