The Terms Unit Contribution and Contribution Margin Are Used Interchangeably

question 195

True/False

The terms unit contribution and contribution margin are used interchangeably.

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Definitions:

Predetermined Overhead Rate

Predetermined Overhead Rate is a rate calculated before a period begins, used to allocate estimated overhead costs to products or job orders based on a selected activity base.

Annual Overhead Costs

Refers to the total expenses that are not directly tied to a specific product or service but are required for the business to operate, accumulated over a year.

Direct Labor Costs

The wages paid to workers who are directly involved in the production of goods or the provision of services.

Indirect Labor

Labor costs associated with support work that does not directly contribute to the manufacture of products or the provision of services, such as maintenance and supervisory wages.