Net sales revenue minus variable costs equals the:Group of answer choicesmargin of safetyrelevant rangecontribution marginbreakeven point
Question
Net sales revenue minus variable costs equals the:
- margin of safety
- relevant range
- contribution margin
- breakeven point
Solution
The answer is "contribution margin". Here's the step-by-step explanation:
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Net sales revenue is the total amount of money generated by a company from selling its goods or services.
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Variable costs are the costs that change in proportion to the volume of goods or services that a company produces.
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When you subtract the variable costs from the net sales revenue, you get the contribution margin.
The contribution margin is a product's price minus all associated variable costs, resulting in the incremental profit earned for each unit sold. The total contribution margin generated by an entity represents the total earnings available to pay for fixed costs and to generate a profit.
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