Contribution Is Defined as the Amount by Which Price Exceeds

question 133

True/False

Contribution is defined as the amount by which price exceeds variable cost per unit. Contribution stated as a percent of price is known as contribution margin.

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Definitions:

Processing Department

A specific unit within a manufacturing facility where a distinct phase of production is carried out, like assembly or packaging.

Cost Per Unit

This refers to the total expense incurred to produce, store, and sell one unit of a product or service.

Materials

The raw items or components used in the production of goods.

Equivalent Unit

A measure used in cost accounting to express the amount of work done by incomplete units in terms of fully completed units.