The Business Entity That Converts Purchased Raw Materials into Finished

question 68

Multiple Choice

The business entity that converts purchased raw materials into finished goods by using labor,technology,and facilities is a:

• A)Manufacturer.
• B)Merchandiser.
• C)Service business.
• D)Not-for-profit service agency.

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Definitions:

Contribution Margin Ratio

The percentage of sales revenue remaining after variable costs are deducted, indicating how much contributes to fixed costs and profit.

Fixed Expenses

Costs that do not change with the level of production or sales over a certain period, such as rent, salaries, and insurance.

Sales

The total amount received from selling goods or services over a given period.

Residual Income

The income that exceeds the minimum required return on an investment or business segment.