The correct answer is Selling price minus variable cost per unit. Contribution, in the context of break-even analysis and cost-volume-profit (CVP) analysis, is defined as the amount of revenue remaining from each unit sale after covering its direct variable costs. This remaining amount, known as the contribution margin, is then available to cover fixed costs and contribute to profit. It is a crucial metric for understanding how each sale contributes to the overall profitability of a business.
Selling price minus absorption cost per unit (A) is incorrect because absorption costing includes fixed manufacturing overhead, which is not part of the contribution margin calculation. Selling price minus fixed cost per unit (B) is also incorrect; fixed costs are not typically allocated on a per-unit basis for contribution margin calculation, as they remain constant regardless of production volume within a relevant range. Selling price minus total cost per unit (D) would yield the net profit per unit, not the contribution margin, as total cost includes both variable and fixed costs. Thus, contribution specifically isolates the revenue available after variable costs.