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What Is the Simplest Method for Classifying Your Accounts Based

question 39

Essay

What is the simplest method for classifying your accounts based on the ones that are the most profitable,least profitable,and the ones in-between?


Definitions:

Variable Cost

A variable cost varies directly with the level of production or sales volume, such as materials and labor costs.

Operating Income

Earnings before interest and taxes (EBIT), a measure of a company's profitability from regular business operations.

Transfer Price

The price at which goods and services are sold between divisions within the same company or between a company and its subsidiary.

Variable Cost

Costs that fluctuate directly with changes in production or sales volume.

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