An Organization Is Responsible to Many Different Entities

question 5

Multiple Choice

An organization is responsible to many different entities. In order to meet the demands of these groups, organizations must participate in stakeholder management. Stakeholder management means that

• A) interests of the shareholders are not the only interests that matter.
• B) stakeholders are second in importance to the shareholders.
• C) stakeholders and managers inevitably work at cross-purposes.
• D) all stakeholders receive financial rewards.

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Definitions:

Contribution Margin

The selling price of a product minus the variable cost per unit, used to cover fixed costs and contribute to net profit.

Fixed Costs

Expenses that do not change with the level of production or sales activities within a short time.

Variable Costs

Expenses which are dependent on the volume of activity within a business.

Profit-Volume Chart

A graphical representation that shows the relationship between a company's profits and its volume of sales, illustrating the break-even point and profit levels at different sales volumes.