Contribution Margin

question 142

Multiple Choice

Contribution margin

• A) is always the same as gross profit margin.
• B) excludes variable selling costs from its calculation.
• C) is calculated by subtracting total manufacturing costs per unit from sales revenue per unit.
• D) equals sales revenue minus variable costs.

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Definitions:

Job-Order Costing System

A cost accounting system that assigns manufacturing costs to each product, allowing detailed tracking of expenditures.

Direct Labor-Hours

The total hours of labor work directly on manufacturing a product or providing a service, often used in costing and pricing decisions.

Milling Department

A section within a manufacturing facility where the process of grinding, cutting, pressing, or crushing materials occurs.

Overhead Applied

The portion of manufacturing overhead costs allocated to each unit of production based on a predetermined rate or method.