Asked by Ranjani Ramaswamy on Jul 05, 2024

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The total contribution margin is calculated as the difference between

A) sales price and variable cost per unit.
B) sales price and fixed cost per unit.
C) total revenue and total variable cost.
D) total revenue and total cost.

Total Contribution Margin

The overall difference between sales revenue and variable costs, indicating the amount available to cover fixed costs and generate profit.

Total Revenue

The overall amount of income generated by a business from its activities, such as sales of goods or services, before deducting expenses.

Total Variable Cost

The sum of all costs that vary directly with the level of production or output, such as raw materials and direct labor expenses.

  • Comprehend the notion of contribution margin and its significance in the context of break-even analysis.
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SF
Stevie FrancyJul 11, 2024
Final Answer :
C
Explanation :
Contribution margin represents the amount of revenue that is left over after deducting variable costs. Therefore, it is calculated as the difference between total revenue and total variable costs. Option A is incorrect because it only considers the contribution margin per unit. Option B is incorrect because fixed costs are not included in the calculation of contribution margin. Option D is incorrect because it includes all costs, including fixed costs, which are not relevant for calculating contribution margin.