In Evaluating Its Customers,which of the Following Questions Should the Firm

question 34

Multiple Choice

In evaluating its customers,which of the following questions should the firm NOT ask?

• A) How will core competencies meet the customer's needs?
• B) Who is the customer?
• C) What are the customers' needs?
• D) How will our top management team interact with the customer?

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Definitions:

Margin of Safety

The difference between actual or expected sales and the break-even point, reflecting the cushion against a loss.

Break Even

Break even refers to the point at which total costs and total revenue are equal, resulting in no net loss or gain and the initial investment is recovered.

Fixed Costs

Expenses that do not change with the volume of production or sales, such as rent, salaries, and insurance, remaining constant regardless of business activity levels.

Contribution Margin Ratio

A financial metric that shows the percentage of revenue that exceeds variable costs, indicating how much revenue contributes to fixed costs and profits.