The Contribution Margin Approach Helps Managers in Short-Term Decision Making

question 99

Multiple Choice

The contribution margin approach helps managers in short-term decision making because it ________.

• A) treats fixed manufacturing overhead as product cost
• B) reports only mixed costs
• C) reports costs and revenues at present value
• D) isolates costs by behavior

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Definitions:

Net Price

The final price after all discounts, rebates, and taxes are applied, indicating the actual cost to the buyer.

Credit Sales

Transactions in which goods or services are provided to a customer with an agreement to pay at a later date.

Income Statement

A financial statement that shows a company's revenues and expenses over a specific period, illustrating how the revenues are transformed into net income or loss.

Net Income

The total earnings of a company after all expenses and taxes have been subtracted from total revenue.