High-Reliability Organizations Structure Communication with

question 5

Multiple Choice

High-reliability organizations structure communication with

• A)redundancy.
• B)formal protocols
• C)informal strategies
• D)a and b
• E)b and c

Calculate and interpret the contribution margin and contribution margin ratio.

Understand and apply the concept of operating leverage and its impact on profitability.

Analyze and calculate the effects of changes in costs (fixed and variable) and sales volume on profit.

Explain the significance of fixed, variable, and mixed costs in decision-making.

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Definitions:

Break-Even Sales

The amount of sales revenue needed to cover all fixed and variable costs, resulting in no profit or loss.

Variable Production Costs

Costs that fluctuate directly with the level of output, including materials, labor, and other expenses that vary with production volume.

Fixed Cost

Expenses that remain constant in total regardless of changes in the level of production or sales volume, such as rent, salaries, and insurance.

Contribution Margin Ratio

A financial metric that shows what portion of sales revenue is available to cover fixed costs and generate profit after variable costs have been paid.