Active Income Is Generated by Production and Distribution, While Passive

question 31

True/False

Active income is generated by production and distribution, while passive income is generated by licensing fees and the collection of dividends.

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Definitions:

Relevant Range

The range of activity within which the assumptions about variable and fixed costs remain valid, used in cost accounting and financial planning.

Product Costs

The costs incurred by a business to manufacture a product, including direct materials, direct labor, and manufacturing overhead.

Variable Cost

Costs that vary directly with the level of production or output, including materials and labor expenses.

Incremental Manufacturing Cost

Additional costs incurred for manufacturing one more unit of a product.