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Contribution Margin
Contribution Margin is the amount by which sales revenue exceeds variable costs of production, indicating how much revenue contributes to fixed costs and profit.
Break-even Point
The level of sales at which total revenues equal total costs, resulting in no profit or loss.
Variable Cost
Variable costs vary directly with the level of production output and can include expenses like raw materials and labor directly involved in a product's manufacturing.
Fixed Costs
Fixed costs are those business expenses that remain constant regardless of the level of production or sales, such as rent, salaries, and insurance.
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