When Making Strategic Decisions About Which Products and How Much

question 105

True/False

When making strategic decisions about which products and how much to produce,managers must need to distinguish fixed costs from variable costs.

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Definitions:

Contribution Margin Per Unit

The difference between the selling price per unit and the variable costs per unit.

Variable Manufacturing Costs

Expenditures that shift in accordance with the volume of output, like raw materials and direct labor costs.

Selling Commission

A fee paid to salespersons or agents for selling a company's products or services, usually a percentage of the sale price.

Net Operating Income

An accounting term representing the profit derived from a company's everyday, non-financial activities and excluding extraordinary items.