Effective Use of the CVP (Cost-Volume-Profit) Model Requires an Understanding

question 60

Multiple Choice

Effective use of the CVP (cost-volume-profit) model requires an understanding of all of the following concepts, except:

• A) Contribution margin per unit.
• B) Contribution margin ratio.
• C) Contribution income statement.
• D) Total cost of goods sold (CGS).
• E) Variable versus fixed cost behavior patterns.

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Definitions:

Capital Balances

Represent the amount of funds contributed by owners plus retained earnings in a company's equity.

Net Income

The total profit of a company after all expenses and taxes have been deducted from revenue.

Salary

Regular payments made by an employer to an employee, typically on a monthly or biweekly basis, in exchange for professional services rendered.