Which of the Following Statements Is Correct

question 22

Multiple Choice

Which of the following statements is correct?

• A)Contribution margin contributes to profits.
• B)Contribution margin contributes to fixed costs.
• C)Contribution margin contributes to variable costs.
• D)Both A and B

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Definitions:

Consignment

Sales of goods through an agent who has possession but not ownership.

Title

The legal right to own, use, or dispose of something, such as property or intellectual property.

Consigned Party

The entity or person holding goods on behalf of another in a consignment agreement, where the goods are sold on the owner's behalf.

Weighted-Average Method

An inventory costing method that calculates the cost of ending inventory and cost of goods sold using the average cost of all similar items in inventory.