Question

The systematic examination of the relationships among selling prices, volume of sales and production, costs, and profits is termed _____ analysis. a.cost-volume-profit b.contribution margin c.budgetary d.gross profit

Answer 1

The correct answer is letter B

Contribution margin is how much of the revenue obtained from the sale of products and services to pay fixed costs (and make a profit), after paying variable costs and expenses (taxes, raw materials, suppliers, staff salaries and others) expenses resulting from those sales).

Through the contribution margin, it is possible to define the contribution margin index (BMI), which is the relationship between the contribution margin and gross operating revenue.