Certified Management Accountant Practice Exam

The contribution margin represents the portion of sales revenue that exceeds total variable costs. This margin contributes to covering fixed costs and generating profit. A variation in the contribution margin indicates changes in either the sales price or the variable cost per unit.

When the selling price increases while variable costs remain constant, the contribution margin rises. Conversely, if variable costs increase while the selling price stays constant, the contribution margin decreases. This relationship highlights the sensitivity of the contribution margin to pricing strategies and cost management, making option B the most accurate choice in this context.

While changes in total fixed costs, sales volume, and break-even points are important financial performance indicators, they do not directly reflect the variations in the contribution margin itself. Hence, those aspects are not suitable as answers to the question focusing on the contribution margin specifically.