Contribution margin reporting and analysis is appropriate only for manufacturing firms,not for service firms.

Question

Quizplus · Accepted Answer

Contribution margin reporting and analysis can be used by both manufacturing firms and service firms. Service firms can determine their contribution margin by subtracting their variable expenses from their revenue, just like manufacturing firms. However, the composition of their variable and fixed costs may differ from manufacturing firms.

Contribution Margin Reporting and Analysis Is Appropriate Only for Manufacturing