Question

Which of the following statements is incorrect? A. The total contribution margin tells managers the amount by which sales revenue exceeds fixed costs. B. The variable cost percentage represents the amount from each sales dollar that covers variable costs. C. Beyond the break-even point, the unit contribution margin "goes straight to" operating income. D. The unit contribution margin would exclude fixed product costs. E. The unit contribution margin can be calculated by subtracting the unit variable cost from the sales price.

Answer 1

The incorrect statement is D. The unit contribution margin would exclude fixed product costs. The unit contribution margin is calculated by subtracting the unit variable cost from the sales price and includes both variable and fixed costs.

Step-by-step explanation:

The incorrect statement is D. The unit contribution margin would exclude fixed product costs.

The unit contribution margin is calculated by subtracting the unit variable cost from the sales price. It represents the amount from each unit sale that contributes towards covering fixed costs and generating operating income. It includes both variable and fixed costs.