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:

Total Cost

The sum of fixed and variable costs incurred by a business in producing a particular level of output.

Residual Demand Curve

The demand that remains for a firm's product after accounting for the demand captured by competitors in the market.

Supply Function

The mathematical relationship showing the quantity of a good or service that producers are willing to sell at each possible price.

Market Demand Curve

A graphical representation that shows the quantity of a product that consumers are willing and able to buy at various prices.