Multiple Choice
Net income results when:
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4. Merchandising Operations
Net Sales
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Join thousands of students who trust us to help them ace their exams!Watch the first videoMultiple Choice
The difference between actual cost incurred and standard cost is called the:
A
gross profit
B
contribution margin
C
variance
D
net sales
Verified step by step guidance1
Understand the concept of 'variance' in Financial Accounting. Variance refers to the difference between the actual cost incurred and the standard cost. It is used to measure performance and identify areas where costs deviate from expectations.
Review the definitions of the other terms provided in the problem: 'gross profit,' 'contribution margin,' and 'net sales.' This helps clarify why these terms are not the correct answer.
Gross profit is the difference between sales revenue and the cost of goods sold (COGS). It does not relate to the comparison of actual and standard costs.
Contribution margin is the difference between sales revenue and variable costs. It is used to assess profitability but does not measure cost deviations.
Net sales refers to total sales revenue minus returns, allowances, and discounts. It is unrelated to the comparison of actual and standard costs.
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