We Use _________________ When the Right Thing to Do Is

question 4

Short Answer

We use _________________ when the right thing to do is not clear.

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Definitions:

Contribution Approach

An income statement format that organizes costs by their behavior. Costs are separated into variable and fixed categories rather than being separated into product and period costs for external reporting purposes.

External Reporting

The process of preparing and disclosing financial statements and other reports to entities outside of the corporation, such as investors and regulatory bodies.

Variable Cost

Costs that change in proportion to the level of production or business activity.

Unit Basis

A method of measurement or allocation in which operations or costs are expressed per single unit of production or activity.