How Do Controllable Margin and Contribution Margin Differ

question 49

Multiple Choice

How do controllable margin and contribution margin differ?

• A)The amount of the controllable margin is larger than contribution margin.
• B)The amount of the contribution margin is usually higher than the controllable margin.
• C)They are synonymous terms.
• D)Controllable margin is used for profit centres, while contribution margin is used for cost centres.

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Definitions:

Price-Earnings Ratio

A valuation ratio of a company's current share price compared to its per-share earnings, used to determine if the stock is over or under-valued.

Book Value Per Share

The shareholder equity available per outstanding share of a company, calculated by dividing total equity by the number of shares outstanding.

Statement of Comprehensive Income

A financial report that includes not only net income, but also other forms of comprehensive income such as unrealized gains or losses on investments.

Earnings Before Interest and Taxes

A financial metric indicating the profitability of a business before accounting for interest and tax expenses.