A Small Business That Has Expanded Beyond the Comfort Zone

question 83

True/False

A small business that has expanded beyond the comfort zone of its entrepreneur will end in bankruptcy.

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Definitions:

Variable Selling

Costs that fluctuate in direct proportion to changes in sales volume, such as commissions and shipping charges.

Manufacturing Margin

The excess of sales over variable cost of goods sold.

Contribution Margin

The amount by which sales revenue exceeds variable costs, contributing towards covering fixed costs and generating profit.

Variable Factory Overhead

Costs that vary with the volume of production and include expenses such as indirect materials and utilities.