Financial Statements in Which Each Item Is Stated as a Percentage

question 61

Multiple Choice

Financial statements in which each item is stated as a percentage of some specific base item in the same statement are known as:

• A) common size statements.
• B) base rate statements.
• C) general purpose statements.
• D) comparative statements.

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Definitions:

Variable Cost Per Unit

The cost associated with producing one additional unit of a product, which varies with the level of production.

Contribution Margin Ratio

The contribution margin ratio calculates the proportion of sales revenue that exceeds variable costs, showing what portion of sales contributes to covering fixed costs and generating profit.

Selling Price

The amount at which a product or service is sold to customers, determined by factors such as market demand, production costs, and competition.

Variable Cost

Costs that vary directly with the level of production or business activity.