Production Managers Must Continually Evaluate Results of the Production Process

question 89

True/False

Production managers must continually evaluate results of the production process and make adjustments along the way.

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Definitions:

Pretax Net Income

The amount of money a company has earned before taxes are deducted.

Fixed Costs

Expenses that do not fluctuate with the volume of production or sales, such as rent, salaries, and insurance.

Variable Costs

Costs that fluctuate in direct proportion to changes in levels of production or sales activity within a business.

Total Contribution Margin

The amount left over from sales revenue after variable expenses have been deducted; it contributes to covering fixed costs and generating profit.