How Is the Contribution Margin Calculated When Utilizing Variable Costing

question 88

Multiple Choice

How is the contribution margin calculated when utilizing variable costing?

• A)Sales less variable cost of goods sold
• B)Sales less variable cost of goods sold,less variable selling and administrative expenses
• C)Sales less cost of goods sold
• D)Sales less variable cost of goods sold,less variable selling and administrative expenses,less fixed cost of goods sold,less fixed selling and administrative expenses

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Definitions:

Equity Method

An accounting technique used by companies to record their investments in other companies, adjusting the investment for the investor's share of the investee's profits or losses.

Consolidated Inventory

The total value of all inventories held by a parent company and its subsidiaries, accounted for in a consolidated financial statement.

Unrealized Inventory Profits

Profits that are reported on paper through an increase in inventory value but have not yet been realized through sales.

Significant Influence

Significant Influence is the ability of an investor to affect the financial or operating policy decisions of the investee through ownership, contracts, or other means, short of full control or joint control.