Regarding the Full-Cost Vs.contribution-Margin Controversy

question 69

Multiple Choice

Regarding the full-cost vs.contribution-margin controversy:

• A)Contribution-margin assumes that all costs are variable.
• B)The company's net profit will be different depending upon which of the two accounting methods is used.
• C)Contribution margin and gross margin essentially are the same.
• D)The full-cost method is the better of the two approaches.
• E)None of these is correct.

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Definitions:

Enforced

The act of implementing or compelling compliance with a law, rule, or obligation.

Consideration

Something of value given by both parties to a contract that induces them to enter into the agreement to exchange mutual performances.

Hamer v. Sidway

A significant case in contract law that established the notion that forbearance (refraining from doing something) can be considered a valuable consideration in a contract.

Sufficient Consideration

A necessary element in contract law where something of value is exchanged between parties to form a valid contract.