The Denominator Used When Calculating a Common Size Income Statement

question 20

Multiple Choice

The denominator used when calculating a common size income statement is ________.

• A)total sales
• B)total liabilities
• C)total expenses
• D)total assets

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Definitions:

Break-Even Point

The point at which total costs and total revenue are equal, resulting in no profit or loss.

Direct Materials

Raw materials that are directly traceable to the manufacturing of a specific product and included in the product's cost calculation.

Break-Even Point

The level of production or sales volume at which total revenues equal total costs, resulting in zero profit or loss.

Contribution Margin Ratio

The ratio of contribution margin to sales revenue, indicating the percentage of each sales dollar available to cover fixed costs and generate profit.