US CMA Part 2 · Chapter 5 · Question 13 of 15
In a contribution margin income statement, what is the contribution margin?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Sales revenue minus all variable costs, including variable selling and administrative costs
Explanation
The contribution format classifies costs by behavior. Contribution margin = sales - all variable costs (manufacturing and non-manufacturing). It is the amount available to cover fixed costs and then provide profit. Sales minus cost of goods sold is gross profit, which belongs to the absorption (functional) format.
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