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The purpose of the covering letter (or letter of application) is to
Operating Income
Earnings before interest and taxes (EBIT), calculated as gross income minus operating expenses, excluding non-operating income and expenses.
Variable Product Cost
Costs that vary directly with the level of production, such as materials and labor.
Total Fixed Overhead
The sum of all costs that remain constant regardless of the level of production or sales, such as rent, salaries, and insurance.
Contribution Margin
The amount remaining from sales revenue after variable costs have been deducted, used to cover fixed costs and to generate profit.
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