Suppose the Performance Evaluations That Salespeople Receive Are Based Solely

question 70

Multiple Choice

Suppose the performance evaluations that salespeople receive are based solely on sales revenue to the exclusion of other important factors.Which of the following would these performance evaluations suffer from?

• A)criterion contamination
• B)lack of reliability
• C)criterion deficiency
• D)lack of criterion relevance

Calculate economic profit or loss based on cost data and market prices.

Understand the law of diminishing returns and its impact on marginal cost.

Identify the conditions for a purely competitive firm to earn a normal profit in the short run.

Interpret cost data to determine production levels for profit maximization.

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Definitions:

Contribution Margin

The amount remaining from sales revenue after variable expenses are deducted, indicating the potential profitability of products.

Net Operating Income

A measure of a company's profitability from its core business operations, excluding non-operating income and expenses.

Variable Expense Ratio

A measurement that indicates the proportion of variable expenses to sales, showing how costs change with sales volume.

Break-even Point

The sales amount where the total income matches the total expenses, leading to neither profit nor loss for the company.