The contribution income statement: A. Reports gross margin B. Is allowed for ext
ID: 2419103 • Letter: T
Question
The contribution income statement:
A. Reports gross margin
B. Is allowed for external reporting to shareholders
C. Categorizes costs as either direct or indirect
D. Can be used to predict future profits at different levels of activity
The higher the margin of safety:
The higher the risk of incurring a loss
The lower the risk of incurring a loss
The less profitable a company will be
D
.
The engineering method estimates cost functions:
Based on analysis and opinions gathered from various departments
By classifying cost as fixed or variable based upon an analyst’s prior knowledge
Using qualitative rather than quantitative analysis
By analyzing the relationship between inputs required and the cost of those inputs
All of the above
A.The higher the risk of incurring a loss
B.The lower the risk of incurring a loss
C.The less profitable a company will be
D
.
The engineering method estimates cost functions:
A.Based on analysis and opinions gathered from various departments
B.By classifying cost as fixed or variable based upon an analyst’s prior knowledge
C.Using qualitative rather than quantitative analysis
D.By analyzing the relationship between inputs required and the cost of those inputs
All of the above
Explanation / Answer
Solution-
D. Can be used to predict future profits at different levels of activity
Explanation-
The variable expense are less from the sales for getting contribution margin, then all fixed expense less from the contribution margin for getting the net profit or loss for the period.
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