The profit margin on an item a company sells can best be defined as:

The profit margin on an item sold by a company refers to the difference between what the product is sold for (the selling price) and the cost incurred to produce or acquire that product (the unit cost of goods sold). This calculation provides a clear picture of how much profit is generated from each unit sold. By subtracting the unit cost from the selling price, you determine the profit made on that specific item. This measure is crucial for businesses as it helps in understanding the profitability of individual products and can guide pricing strategies and cost management.

In contrast, the other choices focus on different financial metrics that do not specifically pertain to calculating the profit margin on a single item. For instance, the total debt minus annual debt payments relates to financial leverage, while variable cost per unit addresses production costs without considering sales price. Lastly, total company revenue minus total company costs represents overall profitability but does not isolate the profit margin of an individual item.