Customer Lifetime Value Is Equal to Sales Attributed to a Particular

question 114

True/False

Customer lifetime value is equal to sales attributed to a particular customer minus the costs associated with satisfying that customer over the lifetime of that customer.

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Definitions:

Fixed Cost

Expenses that do not change in total regardless of the level of production or sales activity, such as rent, salaries, and insurance premiums.

Machine Hour

A machine hour is a unit of measurement representing the operation of machinery or equipment for one hour, used in calculating cost allocation and operational efficiency.

Total Variable Costs

The sum total of all costs that vary with the level of output or production volume, such as materials and labor directly involved in production.

Level Of Activity

A term that refers to the volume or quantity of production or work completed in a business operation, which can significantly impact costs and efficiency.