When Preparing an Income Statement Showing Departmental Contribution Margin

question 94

Multiple Choice

When preparing an income statement showing departmental contribution margin:

• A) indirect expenses are combined with direct expenses.
• B) indirect departmental expenses are added to contribution margin.
• C) direct expenses are subtracted from gross profit of a department.
• D) None of these answers is correct.

---

Definitions:

Consideration

in contract law, refers to something of value given by both parties to a contract that induces them to enter into the agreement to exchange mutual performances.

Merchant

An individual or company engaged in the business of buying and selling goods or services with the intent of making a profit.

Insanity

A mental disorder so severe that it prevents someone from having legal capacity or from being held responsible for their actions, often used as a defense in criminal trials.

Legal Effect

The consequences that a law or legal action imposes on the rights, status, or obligations of the parties involved.