Answer:
3. Is the difference between total revenues and total variable costs
Explanation:
The contribution margin is the amount by which a business sales revenue exceeds the variable cost. In other words, the contribution margin is revenue minus variable costs. The contribution margin is used to cover the business's fixed costs in a period. Profit is, therefore, a result of contribution margin minus fixed costs.
The contribution margin can be calculated per unit of production, product line, or for the entire period (total contribution margin). Businesses use contribution margin to determine the volume of sales needed to breakeven,
