Quizzes and Glossary
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The range over which a company is expected to operate is called the relevant range of the activity index.
A mixed cost contains both selling and administrative cost elements.
Variable costs are costs that remain the same per unit at every level of activity.
If a salesperson incurs $2,000 of expenses in servicing two customers and $4,000 of expenses in servicing four customers, the fixed costs are $1,000.
If revenue = $80 and variable cost = 40% of revenue, then contribution margin = $48.
The contribution margin is the amount of revenue remaining after deducting fixed costs.
Sales mix is the percentage that each product represents of total sales.
If the unit contribution margin is $300 and fixed costs are $240,000 then the break-even point in units would be 800 units.
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