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How Does Flexibility Become an Important Aspect When Controlling Costs

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How does flexibility become an important aspect when controlling costs?


Definitions:

Total Sales Revenue

The overall income generated from selling goods or services before any expenses are subtracted.

Operating Leverage

A measure of how revenue growth translates into growth in operating income, indicating the proportion of fixed versus variable costs a company has.

Margin of Safety

This measures the difference between actual sales and sales at the break-even point, indicating the amount by which sales can drop before losses start occurring.

CVP Analysis

Cost-Volume-Profit Analysis, a business management tool used to determine how changes in costs and volume affect a company's operating income and net income.

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