The Contribution Margin Is Equal to

question 194

Multiple Choice

The contribution margin is equal to

• A) sales minus cost of goods sold.
• B) sales minus variable expenses.
• C) sales minus fixed expenses.
• D) sales minus operating expenses.

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Definitions:

Payback Period

The timeframe required for an investment to generate cash flows sufficient to recover its initial cost.

AAR

Average Annual Return, which measures the average return on an investment over a multi-year period.

Multiple Rates Of Return

One potential problem in using the Internal Rate of Return method if more than one discount rate makes the Net Present Value of an investment zero.

Net Present Value

A process that evaluates how the worth of a dollar now compares to its worth in the future, factoring in both inflation and investment returns.