In Performing Vertical Analysis, the Base for Inventory Is

question 5

Multiple Choice

In performing vertical analysis, the base for inventory is:

• A)total liabilities and stockholders' equity.
• B)total assets.
• C)total cash and cash equivalents.
• D)total current assets.

---

Definitions:

Contribution Margin

The difference between sales revenue and variable costs of a product or service, highlighting how much contribution towards fixed costs and profit is made per unit sold.

Variable Costs

Costs that vary directly with the level of production or sales volume, such as raw materials and sales commissions.

Gross Margin

Gross margin is a company's net sales revenue minus its cost of goods sold, representing the efficiency with which it can produce and sell its products for a profit.

Scattergraph Method

A graphical technique used to identify the relationship between two variables, often used in cost analysis to distinguish between fixed and variable costs.