Examlex
Which of the following statements about developmental theories is true?
Margin of Safety
The difference between actual or expected sales and the break-even point, reflecting the cushion against a loss.
Break Even
Break even refers to the point at which total costs and total revenue are equal, resulting in no net loss or gain and the initial investment is recovered.
Fixed Costs
Expenses that do not change with the volume of production or sales, such as rent, salaries, and insurance, remaining constant regardless of business activity levels.
Contribution Margin Ratio
A financial metric that shows the percentage of revenue that exceeds variable costs, indicating how much revenue contributes to fixed costs and profits.
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