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SSC Financial and Cost Accounting P-1 QUESTION #6124
Question 1

A business uses marginal costing. Which formula correctly calculates contribution?

  • Sales revenue − variable production cost − fixed production cost
  • Sales revenue − variable production cost − fixed production cost − variable selling expenses
  • Sales revenue − variable production cost − variable selling expenses✔️
  • Sales revenue − variable production cost − stepped cost
Correct Answer Explanation

Option C is correct.

Contribution = Sales Revenue − All Variable Costs (variable production costs + variable selling expenses).

Fixed costs are period costs deducted after contribution — they are not part of the contribution formula.