Credit Terms of a Merchandising Company Are 1/15,net 40

question 137

True/False

Credit terms of a merchandising company are 1/15,net 40.This means that the buyer can receive a discount of 1% if the invoice is paid within 40 days of the invoice date.

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Definitions:

Contribution Margin

Contribution margin is a financial metric that represents the amount of revenue from sales that exceeds variable costs, indicating the portion of sales revenue that contributes to covering fixed costs and generating profit.

Machine Hour

A unit of measurement for the operational use of a machine, implying the total time a machine is functional and available for production.

Markup Percentage

The proportion of the cost of goods that is added to cover the overhead and profit, which sets the selling price.

Variable Cost

Costs that change in proportion to the level of production or sales activity, such as raw materials and direct labor.