The Central Division for Chemical Company Has a Return on Investment

question 54

Multiple Choice

The Central Division for Chemical Company has a return on investment of 22% and an investment turnover of 1.4. The profit margin is

• A)20%
• B)15.7%
• C)14%
• D)6.36%

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Definitions:

Contribution Margin

The difference between sales revenue and variable costs of a product or service, indicating how much revenue contributes toward covering fixed costs and generating profit.

Sales

The total revenue generated from selling goods or services over a specific period of time.

Products

Items or goods that have been produced for sale or consumer use.

Absorption Costing

A method of accounting for costs in which all costs of manufacturing a product, including fixed factory overheads, are attributed to the product.