Variable Costs as a Percentage of Sales Are Equal to 100

question 168

True/False

Variable costs as a percentage of sales are equal to 100% minus the contribution margin ratio.

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Definitions:

Marginal Product

The additional output gained from employing an extra unit of input in the production process.

Produce

To create, manufacture, or cultivate goods, especially agricultural products, for consumption or use.

Labor

The use of human physical and mental capabilities to generate goods and services.

Profit Maximization

The process or strategy a firm uses to achieve the highest possible profit from its operations.