Answer (D) is correct . Contribution margin is the excess of revenues over all variable costs (including both manufacturing and nonmanufacturing variable costs) that vary with an output-related cost driver. The contribution margin equals the revenues that contribute toward covering the fixed costs and providing a net income.
Answer (A) is incorrect because Revenues minus cost of goods sold is gross profit (margin).
Answer (B) is incorrect because Nonmanufacturing variable costs are also part of the calculation.
Answer (C) is incorrect because A direct cost is a cost that can be feasibly associated with a single cost object.
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