Alligator Enterprises Has Earned Above-Average Returns Since Its Founding Five

question 107

True/False

Alligator Enterprises has earned above-average returns since its founding five years ago. Since no other firm has challenged Alligator in its particular market niche,the firm's owners can feel secure that Alligator has established a competitive advantage.

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Definitions:

Mixed Cost

A cost consisting of both fixed and variable components, changing in total with the level of activity but remaining constant on a per unit basis only up to a certain level of activity.

Activity

A measure of actions or operations within a process, often used to allocate costs in activity-based costing.

Per Unit

A term referring to the cost, price, or quantity related to one unit of a product or service.

Contribution Margin

The difference between sales revenue and variable costs, indicating how much revenue contributes towards covering fixed costs and generating profit.