Construction Accounting And Financial Management (4th Edition)
4th Edition
ISBN: 9780135232873
Author: Steven J. Peterson MBA PE
Publisher: PEARSON
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Textbook Question
Chapter 10, Problem 1DQ
What are some of the ways a company can increase its contribution margin?
Expert Solution & Answer
To determine
Identify the means to increase the contribution margin of a company.
Explanation of Solution
A company through the following ways can increase its contribution margin:
- By increasing the revenues
- By reducing the costs involved in construction through control procedures
- By reducing the variable overhead
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Students have asked these similar questions
What is operating profit margin?
How is contribution margin calculated? What about contribution margin ratio? Aren’t they the same thing? Why do we need both?
Which of the following is the indicator of the rate at which company is earning profit?
Select one:
a. Margin of safety
b. All options are correct
c. Contribution margin
d. Profit volume ratio
Chapter 10 Solutions
Construction Accounting And Financial Management (4th Edition)
Ch. 10 - What are some of the ways a company can increase...Ch. 10 - Prob. 2DQCh. 10 - Prob. 3DQCh. 10 - Prob. 4DQCh. 10 - A construction company has total revenues of...Ch. 10 - A construction company has total revenues of...Ch. 10 - A construction company has total revenues of...Ch. 10 - A construction company has total revenues of...Ch. 10 - Determine the break-even volume of work for a...Ch. 10 - Determine the break-even volume of work for a...
Ch. 10 - Determine the break-even volume of work for a...Ch. 10 - Determine the break-even volume of work for a...Ch. 10 - A construction company has a fixed overhead of...Ch. 10 - A construction company has a fixed overhead of...Ch. 10 - Determine the break-even contribution margin ratio...Ch. 10 - Determine the break-even contribution margin ratio...Ch. 10 - Determine the break-even contribution margin ratio...Ch. 10 - Determine the break-even contribution margin ratio...Ch. 10 - Determine the profit and overhead markup for a...Ch. 10 - Determine the profit and overhead markup for a...Ch. 10 - Prob. 21PCh. 10 - Prob. 22P
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- What is meant by a products contribution margin ratio and how is this ratio useful in planning business operations?arrow_forwardExplain how a contribution margin income statement can be used to determine profitability.arrow_forwardHow change in activity(sale) affect the contribution margin and net operating income?arrow_forward
- Is there a point in a cost-volume-profit analysis when the company is expected to profit?arrow_forwardHow does the cost system affect the financial position of the firm?arrow_forwardHow can the contribution margin be used to determine the profitability of Ford Motor Company's products and how could it be used to make the operations more profitable?arrow_forward
- How do you calculate contribution margin?arrow_forwardWhich of the following option shows the rate at which company is earning profit? Select one: a. All options are correct b. Margin of safety c. Contribution margin d. Profit volume ratioarrow_forwardGross margin and contribution margins are two important, yet separate measures companies can use to determine how profitable their operations are. Based on your reading, choose one of the following questions to discuss: What are the major differences between the gross and contribution margin? What are the purposes of each type of margin, and what information does each convey? When would each metric be used for decision-making? Are there specific industries or situations where one metric is more valuable than the other? Do you think one type of margin is more important or useful than the other? Why or why not?arrow_forward
- How do you calculate the Corporate cost?arrow_forwardWhy would a firm want to measure profits by segment and how would common costs be allocated to each segment?arrow_forwardConsider a situation in which a firm needs to make a decision regarding the resources to allocate between two products. One product makes a significantly larger contribution margin than the other. How might the contribution margin affect the decision that the firm makes? What if both contribution margins were positive or both were negative? Are there other factors when considering the contribution margin you should look for? What makes the contribution margin positive or negative?arrow_forward
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