Economists and Accountants Have Very Different Definitions of Profit

question 91

True/False

Economists and accountants have very different definitions of profit.

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Definitions:

Fixed Cost

Costs that do not change with the level of production or sales activity, such as rent or salaries.

Segment Margin

The amount of profit or loss produced by a particular segment of a business, considering only the revenues and expenses directly attributable to that segment.

Contribution Margin

The difference between sales revenue and variable costs, indicating how much revenue contributes to fixed costs and profit.

Common Fixed Expenses

Expenses that remain constant in total regardless of changes in the level of activity or volume of production.