The Formula for Calculating the Contribution Margin Per Constrained Resource

question 132

True/False

The formula for calculating the contribution margin per constrained resource is Contribution Margin Per Unit divided by Units Produced.

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Definitions:

Equity Method

An accounting technique used by companies to assess the profits earned by their investments in other companies, recording income based upon the percentage of ownership.

Intra-entity Gross Profit

This refers to the gross profit earned by a company from sales made internally between its own divisions or subsidiary entities.

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a business, including materials and labor costs.

Equity Method

An accounting technique used to record investments in other companies, where the investment is initially recorded at cost and subsequently adjusted for the investor's share of the investee's profit or loss and dividends received.