Contribution Margin Would Be the Most Important Variable in Evaluating

question 45

Multiple Choice

Contribution margin would be the most important variable in evaluating the performance of:

• A) A cost center.
• B) A production center.
• C) An investment center.
• D) A profit center.

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Definitions:

Asset Test

A measure used to determine the liquidity of a company by comparing its liquid assets to its current liabilities.

Operating Segments

Individual, identifiable components of an enterprise that engage in business activities, earn revenues, and incur expenses.

Reportable

Pertaining to information or data that must be disclosed or presented in official reports.

LIFO Cost-Flow

A method in inventory valuation where the most recently produced or acquired items are considered sold first, leading to older inventory costs being reported in the financial statements.