High Shrinkage

question 51

Multiple Choice

High shrinkage:

• A) means the store is operating at a loss.
• B) can be easily tracked.
• C) means the store's turnover rate is too high.
• D) detracts from space productivity.
• E) is anything above .5 percent.

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Definitions:

Variable Costs

Expenses that vary directly with the level of production or sales volume, such as raw materials and sales commissions.

Fixed Costs

Financial obligations such as rent, salaries, and insurance that do not fluctuate with changes in production or sales levels.

Contribution Margin

The amount remaining from sales revenue after variable costs have been deducted, used to cover fixed costs and generate profit.

Margin of Safety

The difference between actual sales and the break-even point, indicating how much sales can fall before a business incurs a loss.