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question 9

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Definitions:

Variable Components

Parts of a cost or expense that change in proportion with changes in the level of business activity or production volume.

Fixed Components

The elements of a business's costs that remain constant regardless of the level of production or sales activity.

Contribution Margin

The amount by which sales income exceeds variable expenses, which is utilized to pay off fixed expenses and create profit.

Variable Costs

Expenses that vary in direct proportion to changes in production or sales volume, such as raw materials and direct labor costs.

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