A Department Probably Would Be Considered for Elimination If It

question 110

Multiple Choice

A department probably would be considered for elimination if it had:

• A)a positive contribution margin and a net income from operations.
• B)a positive contribution margin and a net loss from operations.
• C)a negative contribution margin and a net loss from operations.
• D)a net loss, regardless of the contribution margin.

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Definitions:

Prime Cost

Direct materials cost plus direct labor cost.

Cost Of Goods Manufactured

The total expense incurred to produce goods over a specific period, including labor, materials, and overhead.

Gross Margin

The difference between sales revenue and the cost of goods sold, indicating the financial health of a company's core activities.

Finished Goods Inventory

The stock of completed products that are ready to be sold but have not yet been purchased by customers.