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question 61

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Definitions:

Contribution Margin

The difference between the sales revenue of a product and its variable costs, used to cover fixed costs and profit.

Pretax Net Income

The amount of income earned by a business before taxes have been deducted.

Absorption Costing

A method of product costing that includes all manufacturing costs, both variable and fixed, in the cost of a unit of a product.

Pre-Tax Net Income

The income that a company earns before any taxes are deducted, reflecting the earnings from its core business operations.

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