The Choice of the Absorption or Contribution Approach Affects a Firm's

question 63

Multiple Choice

The choice of the absorption or contribution approach affects a firm's contribution margin because _____.

• A)contribution margin is higher if the contribution approach is used
• B)contribution margin is lower if the contribution approach is used
• C)contribution margin is independent of the approach
• D)none of these answers is correct

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Definitions:

Date of Declaration

The specific date on which a company's board of directors announces the distribution of a dividend or other corporate action.

Marketable Equity Securities

Financial instruments that represent ownership in public companies and can be easily bought or sold in public stock markets.

Realized Gain

Profit resulting from the sale of an asset or investment for more than its purchase price.

Stock Dividend

A disbursement from a corporation to its shareholders, using shares as the medium instead of cash.