Question

LO 3.1The amount of a unit’s sales price that helps to cover fixed expenses is its ________.

contribution margin
profit
variable cost
stepped cost

Answer 1

contribution margin

Step-by-step explanation:

The contribution margin is really the basis for break-even assessment used for the consumer planning of overall costs and sales prices. The contribution margin tends to distinguish the fixed expense and benefit elements from sales revenue which can be used to assess an item's selling price scope, the income generated from sales, and arrangement sales compensation charged to sales force leaders, suppliers, or contract agents.

The contribution margin reflects the percentage of the revenue from sales of a commodity which is not used back by variable costs, thus helping to tackle the fixed costs of a corporation.