Question

The ____ approach shows operating managers and salespeople what they've actually contributed to covering general overhead and profit.A. net marginB. full-costC. marketing overheadD. contribution marginE. net profit

Answer 1

Answer:

The answer is A. net margin.

Explanation:

To answer this, lets see what is net margin first!

you get net margin when you divide the net income or the net profit from the total revenue for that period and then multiply that by 100.

Lets take an example to see what this means.

If the net margin is 40%, that means out of $100 revenue, $40 are profits and the rest are costs.

This is an important indicator for the marketing and the sales people as they are the ones who are primarily engaged in and are responsible for the revenue generation.

So why didn't we choose E.Net Profit?

net profit only shows the total profit and it does not show the profit's relationship with the Total Revenue!