Contribution margin is the excess of sales over a. fixed costs. b. operating income. c. cost of goods sold. d. variable costs.

The contribution margin represents the amount remaining from sales revenue after variable costs have been subtracted. It’s a crucial metric in analyzing how much money is available to cover fixed costs and contribute to profit. This means that option **d. variable costs** is the correct answer! Understanding contribution margin is essential for decision-making in both pricing strategies and product line management. Businesses often utilize this metric to determine which products are worth continuing, phasing out, or promoting more aggressively – making it a valuable tool in optimizing profitability!