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

question 91

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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