The Difference Between the Average Earnings of Eye Surgeons and Those

question 218

Multiple Choice

The difference between the average earnings of eye surgeons and those of janitors is an example of

• A)a temporary differential
• B)a permanent differential
• C)a resource price difference that will cause a reallocation of resources to different uses
• D)a temporary difference that will be eliminated through the reallocation of resources to different uses
• E)a differential caused by a lack of resource mobility

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Definitions:

Variable Selling Expense

Expenses that vary with sales volume, including commissions and shipping charges.

Fixed Selling Expense

Costs associated with selling which remain constant regardless of the level of sales.

Variable Administrative Expense

Costs that vary with changes in the level of an organization's activity, related to administrative functions.

Contribution Margin

The revenue remaining after subtracting variable costs, which can then be used to cover fixed expenses and provide profit.