Comparing Contribution Margin [CM] to Gross Margin [GM], Which of the Following

question 70

Multiple Choice

Comparing contribution margin [CM] to gross margin [GM], which of the following is true?

• A) If Cost of goods sold includes fixed costs, then CM will exceed GM.
• B) If Cost of goods sold does not include any fixed costs, then CM will equal GM.
• C) In the merchandising sector, CM and GM are equivalent terms.
• D) If CM and GM remain constant from one period to the next, operating income has to remain constant as well.
• E) CM is computed after all variable costs are deducted, but GM is computed by deducting only cost of goods sold from revenues.

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Definitions:

Accounts Payable

The amount of money that a company owes to its creditors or suppliers for goods and services that have been received but not yet paid for.

Medical Office

A workspace or facility where health care providers, medical professionals, and administrative staff perform clinical and administrative duties related to patient care.

Liabilities

Financial obligations or debts that a company or individual owes to others, which must be settled over time.

Creditors

Entities or individuals to whom money is owed.