In marginal costing, how is contribution margin calculated?
Practice Questions
Q1
In marginal costing, how is contribution margin calculated?
Sales - Total Costs
Sales - Variable Costs
Sales - Fixed Costs
Sales - Direct Costs
Questions & Step-by-Step Solutions
In marginal costing, how is contribution margin calculated?
Step 1: Identify the total sales amount. This is the total revenue generated from selling products or services.
Step 2: Identify the total variable costs. These are costs that change with the level of production or sales, such as materials and labor directly involved in making the product.
Step 3: Subtract the total variable costs from the total sales amount. This will give you the contribution margin.
