Select from the Following the Incorrect Statement Regarding Contribution Margin

question 58

Multiple Choice

Select from the following the incorrect statement regarding contribution margin.

• A) Sales − Fixed costs = Contribution margin
• B) Net income + Total fixed costs = Contribution margin
• C) At the breakeven point (where the company has neither profit nor loss), Total fixed costs = Total contribution margin
• D) Total sales revenue times the contribution margin percentage = Total contribution margin

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Definitions:

Partnership Agreement

A legal document that outlines the rights, responsibilities, and profit and loss distribution among partners in a business venture.

Contract Between Partners

A legal agreement that outlines the rights, responsibilities, and share of profits/losses among partners in a partnership.

Distribution Of Remaining Cash

The allocation of left-over cash to shareholders or for other corporate purposes after settling all obligations and investments.

Liquidation

Liquidation is the process of selling off a company's assets to pay off its debts and liabilities, typically occurring when a company is insolvent or ceasing operations.