The Contribution Margin of Every Unit of Goods or Services

question 41

True/False

The contribution margin of every unit of goods or services sold after the break-even point has been reached will contribute to profit.

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Definitions:

Direct Material

Raw materials that are directly traceable and allocable to a finished product.

Material Purchase Price Variance

A reiteration, focusing on the deviation between the actual amount paid for material and the standard cost.

Standard Price

The predetermined cost assigned to materials, labor, and overhead for the purpose of budgeting and cost control.

Actual Purchase Price

The specific cost paid for goods or services at the time of purchase, as opposed to the budgeted or standard cost.