Managers can use contribution margin to predict the change in operating income when volume changes.

Question

Quizplus · Accepted Answer

Contribution margin is the amount of revenue remaining after deducting all variable costs associated with the production of goods or services. It is a valuable tool for managers in predicting how changes in sales volume will affect their operating income. By using contribution margin, managers can determine the breakeven point and make more informed decisions about pricing, cost control, and product mix. Thus, the statement is true.

Managers Can Use Contribution Margin to Predict the Change in Operating