Contribution margin is:

A) Sales less cost of goods sold.
B) Sales less variable production, variable selling, and variable administrative expenses.
C) Sales less variable production expense.
D) Sales less all variable and fixed expenses.

Contribution Margin

The difference between sales revenue and variable costs, indicating how much revenue contributes towards covering fixed costs and generating profit.

Variable Production Expense

Costs that vary directly with the level of production, including raw materials and direct labor costs.

Variable Selling

Costs associated with selling a product that vary directly with the volume of sales.