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The Cadillac Division of GM Needs to Decide If They

question 95

Multiple Choice

The Cadillac division of GM needs to decide if they should produce a minivan,which is a type of vehicle they have never made before.This would be classified as a __________ decision,made under conditions of __________.


Definitions:

Contribution Margin Ratio

The percentage of each sale that contributes to covering fixed costs, calculated as (Sales - Variable Costs) / Sales.

Margin of Safety

The difference between actual sales and the break-even point, measuring the risk of not covering fixed costs.

Pre-tax Income

The amount of income earned by an individual or company before any taxes have been deducted.

Variable Costs

Costs that vary directly with the level of production or service activity, such as raw materials and labor hours.

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