A Self-Sustaining Foreign Subsidiary Is One That Is Financially and Operationally

question 67

True/False

A self-sustaining foreign subsidiary is one that is financially and operationally independent of the parent company.

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Definitions:

Margin of Safety

The difference between actual sales and the break-even point, indicating the level of risk in not covering fixed costs.

Composite Units

A measure used in costing to represent a bundle or mix of goods or services treated as a single unit.

Break-Even Point

The financial state in which total costs equal total revenues, resulting in neither profit nor loss.

Variable Cost

Costs that vary directly with the level of production or volume of services provided.