Answer the following questions using the information below:
Peggy's Pillows produces and sells a decorative pillow for $75.00 per unit. In the first month of operation, 2,000 units were produced and 1,750 units were sold. Actual fixed costs are the same as the amount budgeted for the month. Other information for the month includes:
-What is contribution margin using variable costing?
Definitions:
Diversified Away
The reduction of risk in an investment portfolio by allocating investments among various financial instruments, industries, and other categories to minimize the impact of any single asset or risk.
Perfectly Negatively Correlated
This refers to a relationship between two variables where one variable increases as the other decreases with a correlation coefficient of -1.
Portfolio's Risk
The overall risk associated with holding a portfolio of investments, considering how the risks of the individual investments affect the portfolio as a whole.
Stand-alone Risk
Stand-alone risk refers to the risk associated with investing in a single asset or project, without considering the diversity or portfolio effects.
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