A Normative or Prescriptive Approach Is One That Describes How

question 98

True/False

A normative or prescriptive approach is one that describes how decision makers ideally ought to behave so as to make the best possible decisions.

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Definitions:

Sales Mix

The combination of different products or services that a company sells, significantly impacting its profitability due to differing margins on each item.

Break-Even Point

The volume of production or sales at which total revenues equal total expenses, with no profit or loss.

Variable Expense Per Unit

The cost that varies with each unit produced or sold, affecting the company's total variable expenses directly.

Total Contribution Margin

The difference between total sales revenue and total variable costs, indicating how much revenue is available to cover fixed costs and generate profit.