The Following Diagram Is a Cost-Volume-Profit Graph for a Manufacturing

question 16

Multiple Choice

The following diagram is a cost-volume-profit graph for a manufacturing company: The difference between line AB and line AC (area BAC) is the

• A) contribution ratio.
• B) total variable cost.
• C) contribution margin per unit.
• D) total fixed cost.

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Definitions:

Deferred Revenue

Money received by a company for goods or services yet to be delivered or performed, recognized as a liability until the service or product is delivered.

Adjusting Entry

An accounting entry made to update the financial records before financial statements are prepared, ensuring they follow the accrual basis of accounting.

Legal Services

Professional services provided by lawyers or legal practitioners to advise or represent clients in legal matters.

Deferred Revenue

Money received by a company for goods or services which have not yet been delivered or performed, recorded on the balance sheet as a liability until the service is completed or goods are delivered.