In Two Companies Making the Same Product and with the Same

question 99

True/False

In two companies making the same product and with the same total sales and total expenses,the contribution margin ratio will tend to be lower in the company with a higher proportion of fixed expenses in its cost structure.

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Definitions:

Economic Rent

The excess payment made to or income received by a factor of production over what would be needed to keep that factor in its current use.

Wage Rates

The standard amount of compensation individuals receive in exchange for their labor, usually expressed per hour or year.

Productivity

The measure of the efficiency of a person, machine, factory, system, etc., in converting inputs into useful outputs.

MRP Curves

Marginal Revenue Product curves, which depict the additional revenue generated by employing one more unit of a resource, such as labor or capital.