The Customer Profit Margin Allows Managers to Compare Customers Based

question 31

Multiple Choice

The customer profit margin allows managers to compare customers based on

• A)Absolute sales volume.
• B)How much each dollar of revenue they generate goes to the bottom line,regardless of the customers' absolute sales volume.
• C)How many dollars a customer contributes to the bottom line.
• D)Average contribution margin.

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Definitions:

Flexible Budget

A budget that adjusts or flexes with changes in volume or activity, allowing for more accurate forecasting and analysis.

Static Budget

A fixed budget that remains unchanged over a period, regardless of variations in actual sales volume, production levels, or other operating factors.

Variable Budget

Variable Budget is a budget that adjusts based on changes in the volume of activity, allowing expenses to vary in direct proportion to changes in operational levels.

Favorable Variances

Differences between actual and budgeted or standard costs that result in better-than-expected financial performance.