Segment Sales Revenue Minus Which of the Following Sets of Costs

question 90

Multiple Choice

Segment sales revenue minus which of the following sets of costs is equal to segment margin?

• A) variable Cost of Goods Sold, total selling expense, and direct fixed costs
• B) variable Cost of Goods Sold, variable selling expense, and direct fixed costs
• C) variable selling expense, variable Cost of Goods Sold, and common fixed costs
• D) variable selling & administrative expense, variable Cost of Goods Sold, and direct fixed costs

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Definitions:

Contribution Margin

The difference between sales revenue and variable costs, used to cover fixed costs and generate profit.

Variable Costing

A costing method that only includes variable costs (direct materials, direct labor, and variable manufacturing overhead) in product costs, while fixed costs are expensed in the period they are incurred.

Absorption Costing

An accounting method that includes both variable and fixed manufacturing overhead costs in the cost of a unit of product.

Manufacturing Overhead

All indirect costs related to manufacturing, excluding direct materials and direct labor, such as factory rent, utilities, and equipment depreciation.