In the Contribution Margin Approach, Any Excess Revenues Over Costs

question 30

Multiple Choice

In the contribution margin approach, any excess revenues over costs

• A) Equals profits
• B) Contributes to common costs and profits
• C) Results in negative amortization
• D) Offsets activity-based accounts
• E) Reduces warehousing and production costs

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Definitions:

Monthly Demand

The sum amount of a product or service that purchasers are ready and can afford to buy over the course of a month.

Variable Manufacturing Overhead

The portion of manufacturing overhead costs that changes in proportion to the level of production activity.

Fixed Manufacturing Overhead

Costs related to the production that remain constant regardless of the level of manufacturing activity, such as building lease payments or salaries of permanent staff.

Book Value

The net value of a company's assets found on its balance sheet, calculated as total assets minus liabilities and intangible assets.