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It has been suggested that learning effects are important only during the start-up period of a new process and that they cease after two or three years. Any decline in the experience curve after such a point is due to
Fixed Costs
Fixed costs are expenses that do not change with the level of production or sales, such as rent, salaries, and insurance premiums.
Variable Costs
Expenses that change in proportion with the level of business activity or production volume, such as raw materials and direct labor costs.
Target Income
The desired profit level that a company aims to achieve within a specific period, often used in budgeting and financial planning.
Contribution Margin
The amount of revenue remaining after subtracting variable costs, used to cover fixed costs and generate profit.
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