Which of the Following Statements About Contribution Margin and Gross

question 15

Multiple Choice

Which of the following statements about contribution margin and gross margin in CVP analysis is TRUE?

• A)Contribution margin equals total revenue minus cost of goods sold.
• B)Contribution margin equals total revenue minus non-variable costs.
• C)Gross margin equals total revenue minus cost of goods sold.
• D)Service companies can compute a gross margin but not a contribution margin.
• E)Gross margin equals total revenue minus non-variable costs.

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Definitions:

45° Line

A reference line in economics and finance, representing situations where two measured quantities are equal.

Income Distribution

Describes how a nation’s total GDP is distributed amongst its population, often highlighting the disparities between different income groups.

Market Economy

An economic system where supply and demand within a free market determine the production of goods and services, with minimal governmental intervention.

Productivity

Productivity is a measure of efficiency, typically quantified as the ratio of output produced to the inputs used in the production process.