Souza Inc, Which Produces and Sells a Single Product, Has

question 84

Multiple Choice

Souza Inc, which produces and sells a single product, has provided its contribution format income statement for October.

-If the company sells 3,600 units,its total contribution margin should be closest to:

• A) $39,200
• B) $5,670
• C) $43,200
• D) $48,000

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Definitions:

Profit-Volume Chart

A graphical representation that shows the relationship between a firm's profits and its volume of sales.

Cost-Volume-Profit Chart

A graphical representation that shows the relationship between a company's costs, sales volume, and profits.

Operating Leverage

The degree to which a firm or project can increase operating income by increasing revenue, a measure of how revenue growth translates into growth in operating income.

Variable Costing

A managerial accounting method that includes only variable production costs (materials, labor, and overhead) in product costs, treating fixed manufacturing overhead as an expense of the period.