A Profitable Utility Will Maintain a High Operating Ratio

question 43

True/False

A profitable utility will maintain a high operating ratio.

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Definitions:

Variable Cost

Expenses that directly fluctuate in relation to the amount of goods or services produced, including labor and materials.

Marginal Cost

The increase in cost resulting from the production of an extra product or service unit.

Marginal Cost

The cost of producing one more unit of a good or service, which may change with the level of output.

Fixed Cost

Expenses that remain constant regardless of production or sales volume, including rent, salaries, and insurance.