The Contribution-Margin Format of the Income Statement

question 179

Multiple Choice

The contribution-margin format of the income statement:

• A)is used with absorption costing
• B)highlights the lump sum of fixed manufacturing costs
• C)distinguishes manufacturing costs from nonmanufacturing costs
• D)calculates gross margin

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Definitions:

Marginal Cost

The increase in cost that arises from producing one additional unit of a good or service.

Output Effect

The impact on total output or production due to a change in selling price, affecting the quantity sold.

Price Effect

The impact on consumer demand and consumption patterns caused by changes in the price of goods or services.

Collude

To cooperate secretly, especially with the intention to deceive or achieve an illegal or deceitful purpose.