What Is Meant by Normative Theory

question 29

Short Answer

What is meant by normative theory?

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Definitions:

Operating Leverage

A measure of how revenue growth translates into growth in operating income, indicating the degree to which a company can increase profits by increasing sales.

Break-even Sales

The amount of revenue needed to cover both the variable and fixed costs of a business, resulting in zero profit or loss.

Variable Cost

Costs that vary directly with the level of production or service delivery, such as raw materials and labor costs.

Fixed Costs

Costs that do not vary with the level of production or sales volume, remaining constant even as production levels change.