The 80/20 Principle States That 80 Percent of a Product's

question 76

True/False

The 80/20 principle states that 80 percent of a product's revenue comes from only about 20 percent of its users.

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Definitions:

Product Costs

Expenses directly incurred from the manufacturing of products, including direct materials, direct labor, and manufacturing overhead.

Manufacturing Margin

The difference between the sales revenue of manufactured goods and the cost of their direct materials and direct labor.

Variable Selling

Costs associated with selling a product that vary with the level of sales activity, such as commissions or shipping fees.

Administrative Expenses

These are the expenses that an organization incurs not directly tied to a specific function such as manufacturing, production, or sales.