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Variable Cost
Costs that change in proportion to the level of production activity or volume, such as raw material costs and direct labor costs.
Fixed Cost
A cost that remains constant, in total, regardless of changes in the level of activity within the relevant range. If a fixed cost is expressed on a per unit basis, it varies inversely with the level of activity.
Margin of Safety Percentage
A metric that measures how much sales can drop before a business reaches its break-even point, typically expressed as a percentage.
Variable Expenses
Costs that vary directly with the level of production or business activity.
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