In Preparing Contribution Margin Income Statements When Will the Total

question 74

Multiple Choice

In preparing contribution margin income statements when will the total cost of goods sold be included as a variable cost?

• A) It is always inculded for all businesses selling products.
• B) When the business is a merchandising company.
• C) When the business is a manufacturer.
• D) The total cost of goods sold is never included in variable cost.

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Definitions:

Free-Market System

A type of economic system where prices for goods and services are determined by the open market and by consumers. In a free-market system, the laws and forces of supply and demand are free from any intervention by a government or other authority.

Coordinating Mechanism

Systems and processes that facilitate the efficient allocation and use of resources within an economy or organization.

Command Economy

An economic system in which the government or a central authority controls all major aspects of production and distribution.

Manufacturers Decide

The process by which companies determine what products to produce, how much to produce, and at what price to sell based on market demand and other factors.