Selling Price of the Product Minus the Variable Cost of the Product

question 145

Multiple Choice

Selling price of the product minus the variable cost of the product yields:

• A) contribution margin.
• B) profit.
• C) fixed cost.
• D) loss.

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Definitions:

Investing Activity

Transactions involving the purchase or sale of long-term assets and other investments not included in cash equivalents.

Return on Assets

A financial ratio indicating how profitable a company is relative to its total assets, measuring the efficiency of asset use.

Leverages

The use of borrowed money (debt) in addition to equity in the investment to finance the purchase of assets and increase the potential return on investment.

Statement of Cash Flows

A financial report that shows how changes in balance sheet accounts and income affect cash and cash equivalents, dividing activity by operating, investing, and financing activities.