The Contribution Margin Tells Us What Happens to Profits as Volume

question 199

True/False

The contribution margin tells us what happens to profits as volume changes if a segment's capacity and fixed costs change as well.

---

Definitions:

Sole Proprietors

Individuals who own and operate their business by themselves, having complete control and bearing ultimate legal and financial responsibility.

Asset

Anything of value owned by a person or company that can be used or sold to pay debts or generate income.

Debt

Money owed by one party to another under an agreement to repay borrowed funds or provided goods/services.

Profit

Profit represents the financial gains obtained when the revenues generated from business activities exceed the expenses, costs, and taxes needed to sustain those activities.