What Are the Benefits and Limitations of a High Degree

question 44

Essay

What are the benefits and limitations of a high degree of formalization in an organization?

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Definitions:

Fixed Manufacturing Overhead

Costs that remain constant regardless of the level of production or output in a manufacturing environment.

Variable Distribution Costs

Expenses that change in proportion to how a product is stored, handled, and delivered.

Contribution Margin

The amount remaining from sales revenue after variable expenses are deducted, indicating how much of the revenue actually contributes to covering fixed costs.

Avoidable Fixed Costs

Costs that can be eliminated if a particular decision is made, such as discontinuing a product or service that is not contributing to profits.