If a Retailer Sells a Product Whose Contribution Margin Equals

question 249

True/False

If a retailer sells a product whose contribution margin equals the gross margin percentage, the gross margin percentage will be unaffected by the transaction.

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Definitions:

FIFO Method

An inventory valuation method where the first items added to inventory are considered the first sold.

Conversion Costs

Costs incurred to convert raw materials into finished products, including both direct labor and manufacturing overhead expenses.

Conversion Cost

The combined total of direct labor and manufacturing overhead costs, representing the expenses necessary to convert raw materials into finished goods.

Direct Materials

Direct materials constitute the primary raw inputs directly incorporated into the manufacture of products, distinctly traceable to the product being produced.