What Is the Purpose for Determining Contribution Margin

question 117

Multiple Choice

What is the purpose for determining contribution margin?

• A) To show the contribution by department toward covering indirect costs
• B) To help determine whether or not to eliminate a department
• C) To show the effect on net income for each department
• D) All of these answers are correct.

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Definitions:

Resistive Current

The current that flows through a circuit with only resistive elements, directly proportional to the voltage across and inversely proportional to the resistance.

RC Parallel Circuit

An electrical circuit that consists only of a resistor (R) and a capacitor (C) connected in parallel, affecting the overall impedance and phase angle.

RC Parallel Circuit

A type of electrical circuit where resistor(s) and capacitor(s) are connected in parallel, affecting the charging and discharging rate of the capacitor.

Capacitive Reactance

Opposition to AC flow in capacitors, varying inversely with the frequency of the operation and the capacitance value.