Which of the Following Statements About the Contribution-Margin Approach Is

question 1

Multiple Choice

Which of the following statements about the contribution-margin approach is FALSE?

• A) It is concerned with the amount contributed by an item or group of items toward covering fixed costs.
• B) This approach suggests that it is not necessary to consider all costs in all situations.
• C) Top management almost always finds this approach more useful than full-cost analysis.
• D) This approach frequently leads to data which suggest a different decision than might be indicated by the full-cost approach.
• E) It focuses on controllable costs-rather than on total costs.

---

Definitions:

Effective Interest Method

A technique of calculating the amortized cost of a bond and the interest expense over the bond's life, taking into account any premiums or discounts.

Journal Entry

A record in accounting that notes every transaction, capturing both the debit and credit side, in financial statements.

Market Rate

The prevailing interest rate available in the marketplace or the price at which goods can be bought or sold in an open market.

Bond Issue

The process by which a borrower issues bonds to investors in order to raise capital.