Differential Pricing Means Different Buyers Pay Different Prices for the Same

question 155

True/False

Differential pricing means different buyers pay different prices for the same quality and quantity of product.

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Definitions:

Contribution Margin Ratio

The percentage of sales that exceeds variable costs, showing how much revenue is available to cover fixed costs and generate profit.

Fixed Costs

Costs that remain constant regardless of a company's level of activity, including expenses like rent, salaries, and insurance.

Actual Sales

The real revenue generated from goods or services sold by a business, as opposed to projected or forecasted sales.

Activity Base

A measure or quantity (e.g., labor hours, machine hours) used in allocating overhead costs to products or services, reflecting the cause-and-effect relationship between cost drivers and costs.