Which of the Following Is ALWAYS TRUE About the Purchases

question 43

Multiple Choice

Which of the following is ALWAYS TRUE about the purchases of existing businesses?

• A)Once under new ownership, existing businesses outperform initial revenue projections.
• B)Once under new ownership, any underlying problems are the responsibility of the new owner.
• C)Once under new ownership, consumer curiosity about the new ownership will cause a spike in sales.
• D)Once under new ownership, remaining staff are suspicious or fearful of the new owner.

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Definitions:

Contribution Margin

The amount by which the sales of a product exceed its variable costs, representing the portion of sales revenue that contributes to covering fixed costs and generating profit.

Unit Product Cost

The total cost (direct materials, direct labor, and overhead) to produce one unit of a product.

Absorption Costing

An accounting method that includes all manufacturing costs (direct material, direct labor, and both variable and fixed manufacturing overhead) in the cost of a product.

Net Operating Income

A company's total earnings from its operations, excluding taxes and interest.