Contribution Margin on an Income Statement Is Equal to Sales

question 135

True/False

Contribution margin on an income statement is equal to sales revenue minus variable expenses.

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Definitions:

Traditional Costing

An accounting method that assigns overhead costs to products based on a standard measure, often leading to less accuracy in modern, complex manufacturing environments.

Direct Labor-Hours

The total hours worked by employees that are directly involved in the production process.

Unit Product Cost

Unit product cost is the total cost (including materials, labor, and overhead) divided by the total number of units produced, representing the cost per unit.

Activity-Based Costing

A costing methodology that assigns overhead and indirect costs to specific activities, providing more accurate product costing.