Variations in Operating Income Over Time Because of Variations in Unit

question 89

Multiple Choice

Variations in operating income over time because of variations in unit sales, price, cost margins, and/or fixed expenses are called:

• A) business risk
• B) exchange rate risk
• C) purchasing power risk
• D) financial risk

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Definitions:

Measurement Units

Standardized quantities used to specify measurements, such as meters for length, kilograms for mass, and seconds for time.

Contractual Agreements

Legally binding documents that outline the terms, conditions, and obligations of the parties involved in a business arrangement.

Full Payment

The complete settlement of an obligation, such as the total amount owed for goods or services.

Positive Cost Variance

Occurs when the actual cost of a project is less than the budgeted amount, indicating under-spending or efficiency.