Which of the Following Formats Is Typically Used in Year-To-Date

question 47

Multiple Choice

Which of the following formats is typically used in year-to-date income statements prepared for internal use under a responsibility accounting system?

• A) Sales - Cost of Goods Sold = Gross Margin;Gross Margin - Operating Expenses = Net Income
• B) Sales - Manufacturing Costs = Manufacturing Margin;Manufacturing Margin - Selling and Administrative Costs = Net Income
• C) Sales - Variable Costs = Contribution Margin;Contribution Margin - Fixed Costs = Net Income
• D) None of these.

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Definitions:

Cross-Price Elasticity

A measure in economics that shows how the quantity demanded of one good reacts to a change in price of another good, indicating their substitutability or complementarity.

Butter And Margarine

These are two types of spreads commonly used as alternatives to each other; butter is made from animal fat while margarine is made from vegetable oils.

Water And Lemons

This may refer to the economic theory illustrating the concept of asymmetric information, where sellers have more information about the product quality than buyers, as famously exemplified in Akerlof’s “The Market for Lemons.”

Cross-Price Elasticity

A measure of how the demand for one good responds to a change in the price of another good, reflecting substitutes or complements.