In cost accounting, the amount per unit that contributes to fixed costs after variable costs are deducted is called

• A. Overhead
• B. Fixed cost
• C. Variable cost
• D. Contribution

Answer: (D)

The amount left per unit after covering variable costs is the contribution per unit (also called contribution margin per unit). It is calculated as the selling price per unit minus the variable cost per unit. This leftover portion is what contributes to fixed costs and, after those are covered, to profit.

This matters because it shows how much each unit actually adds to covering fixed expenses and earnings, and it underpins break-even and profitability analyses. Overhead are indirect costs allocated to products, not the residual per unit after variable costs. A fixed cost is a total amount that doesn’t change with output, and a variable cost is the cost that changes with the number of units produced. The per-unit amount that remains after variable costs are paid is the contribution.