A Performance Measure Which Assesses a Buyer's Contribution to ROA

question 51

Multiple Choice

A performance measure which assesses a buyer's contribution to ROA is called the

• A) cost plus pricing.
• B) gross margin.
• C) gross margin return on investment.
• D) net profit.
• E) break-even point.

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Definitions:

Contribution Margin

The amount by which sales revenue exceeds variable costs of a product, indicating how much contributes to covering fixed costs and generating profit.

Fixed Budget

A budget that is established at the beginning of a period and does not change, regardless of actual performance or outcomes.

Direct Labor Rate

The cost per hour for direct labor, which includes wages of workers who are directly involved in the production of goods.

Efficiency Variances

Represents the difference between the actual input costs and the standard input costs anticipated for the production achieved.