What Critical Event Must Take Place Before Goods Can Be

question 6

Multiple Choice

What critical event must take place before goods can be shipped in order to assure payment can be reasonably expected?

• A)Determination of correct delivery address
• B)Credit approval
• C)Matching of shipping document with sales invoice
• D)Receipt of sales order from the customer

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Definitions:

Cost of Goods Sold

The direct costs attributable to the production of the goods sold in a company, including material and labor costs.

Break-Even Point

The level of production or sales at which total revenues equal total expenses, resulting in no net profit or loss.

Contribution Margin Ratio

The ratio of contribution margin to sales revenue, indicating the percentage of each sales dollar available to cover fixed costs and provide profit.

Fixed Expenses

Costs that do not fluctuate with changes in production level or sales volume, such as rent, salaries, and insurance.