Supporters of the Contribution Margin Approach Believe That

question 10

Multiple Choice

Supporters of the contribution margin approach believe that:

• A) indirect expenses should be departmentalized.
• B) indirect expenses should not be used for evaluating departmental performance.
• C) indirect expenses are proportionally charged to each department.
• D) direct expenses should not be used in evaluating departmental performance.

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Definitions:

Profit

The financial benefit realized when revenue generated from business activities exceeds the expenses and costs.

Indirect NCI

Is a concept related to non-controlling interest (NCI) that involves the indirect ownership stake of a parent company in a subsidiary through its interest in another subsidiary.

Direct NCI

Refers to the non-controlling interest that is directly attributable to a parent company's ownership in a subsidiary.

Economic Entity

An organization or unit in society that has the ability to conduct economic activities, such as businesses or governments.