Gross 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?
Gross 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?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Gross 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?
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