The Contribution Margin Ratio Can Be Calculated by Subtracting the Variable

question 98

True/False

The contribution margin ratio can be calculated by subtracting the variable cost ratio from one.

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Definitions:

Prime Costs

The combined costs of direct materials and direct labor that are directly attributable to the manufacturing process.

Direct Materials

Materials that are directly consumed in the production of a product and are easily traceable to it.

Cost of Goods Sold

The immediate expenses related to the creation of products sold by a business, which include costs for materials and labor.

Merchandising Firm

A business that purchases goods and resells them at a profit without changing their basic form.