Arturo Is a Salesperson for a Firm That Sells and Leases

question 239

True/False

Arturo is a salesperson for a firm that sells and leases heavy construction equipment. This equipment is very expensive, and is highly specialized. Arturo spends a great deal of time learning about potential customers' needs, then locates exact specifications of equipment offered by all the major producers in the industry. Armed with this information, Arturo is able to identify the best equipment for each job. Arturo has completed the preapproach stage of the selling process. 

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Definitions:

Contribution Margin

The sum of money left over after variable costs are subtracted, which is available to pay for fixed costs and add to profit.

Incremental Manufacturing Cost

The additional cost associated with producing one more unit of a product.

Direct Materials

Raw materials that are directly traceable and a major component of a finished product.

Manufacturing Overhead

All indirect costs associated with the production process, including utilities, depreciation, and factory supplies, that are not directly traceable to a product.