Contribution Margin Is the Amount Remaining After

question 157

Multiple Choice

Contribution margin is the amount remaining after:

• A)variable expenses have been deducted from sales revenue.
• B)fixed expenses have been deducted from sales revenue.
• C)fixed expenses have been deducted from variable expenses.
• D)cost of goods sold has been deducted from sales revenues.

Understand the concept of economic profits in a perfectly competitive industry and their implications for firm behavior.

Analyze the impact of market demand changes on prices and output in the short and long run.

Explain the significance of entry and exit of firms in a perfectly competitive market and its effect on long-run equilibrium.

Identify the conditions for long-run equilibrium in a perfectly competitive market.

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Definitions:

Departmental Overhead Rate

A rate used to allocate overhead costs to specific departments, calculated based on the relationship between indirect costs and activity level.

Own Allocation Base

Refers to the specific denominator that a company chooses to allocate indirect costs to different cost objects, based on their usage or benefit from those costs.

Plantwide Overhead Rate

A single overhead absorption rate used throughout a manufacturing facility to allocate overhead costs to products.

Volume-Based Measures

Metrics that quantify outcomes or activities based on the amount or volume of production, sales, or other business operations.