If an Organization Wants to Make a Profit,it Must Generate

question 37

Multiple Choice

If an organization wants to make a profit,it must generate more sales revenue than the total costs it incurs.Which of the following is not a correct expression of the profit equation?

• A)Operating income = Sales revenue - Total variable costs - Total fixed costs
• B)Operating income = Sales revenue - Discretionary costs - Fixed costs
• C)Operating income = [Sales price per unit – Variable cost per unit x # units sold] – Fixed cost
• D)Operating income = [Contribution margin per unit x # units sold] – Fixed costs

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Definitions:

Specialization

The practice of focusing effort and resources on a specific task, area of knowledge, or market segment to increase efficiency and proficiency.

Comparative Advantage

The proficiency of an individual, a business, or a nation in generating a product or executing a service at a more economical opportunity cost than its competitors.

Lower Cost

Refers to a situation or strategy in which expenses are minimized or reduced.

Range of Exchange Rates

The variability or difference in the rate at which one currency can be exchanged for another.