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Question

Which among the following profitability level is the profit from which the fixed costs are to recovered first to arrive at the profit?

A Net Profit Correct Answer Incorrect Answer
B Operating Profit Correct Answer Incorrect Answer
C EBITDA Correct Answer Incorrect Answer
D Contribution Correct Answer Incorrect Answer

Solution

Contribution is the profit level under Marginal Costing which contributes first towards recovery of fixed costs and later, leads to the generation of profits.

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