Accounting · Break-Even Analysis
In the context of break-even analysis, how is the 'Contribution Margin' defined?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1It is the sum of the selling price and total variable costs which indicates the maximum achievable profit.
- 2It is the excess of total fixed and variable costs representing the profit generated per unit.
- 3It is the excess of selling price over total variable costs representing revenue available to cover fixed costs.✓
- 4It is the excess of total fixed costs over the selling price used to cover raw material expenses.
Correct answer
It is the excess of selling price over total variable costs representing revenue available to cover fixed costs.
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