The CVP Income Statement Classifies Costs

question 10

Multiple Choice

The CVP income statement classifies costs

• A) as variable or fixed and computes contribution margin.
• B) by function and computes a contribution margin.
• C) as variable or fixed and computes gross margin.
• D) by function and computes a gross margin.

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Definitions:

Sum-Of-The-Years-Digits

A depreciation method that results in a more accelerated write-off of an asset than the straight-line method, basing calculations on the sum of the years of the asset’s life.

Resale Value

The expected market value or price at which an asset, such as a vehicle or property, can be sold again.

Equipment

Tools, machinery, or other apparatus used for specific purposes, especially in industrial or professional settings.

Double-Declining-Balance

A method of accelerated depreciation which doubles the regular depreciation rate, reducing the book value of assets more quickly.