Performance Indexes

question 144

Multiple Choice

Performance indexes:

• A) are based on the "iceberg principle."
• B) show the relation of one value to another.
• C) are used mainly to eliminate lazy salespeople.
• D) provide a qualitative measure of what "ought to happen."
• E) are calculated from the Consumer Price Index.

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Definitions:

Contribution Margin

The amount of revenue remaining after deducting variable costs, used to cover fixed costs and generate profit.

Variable Cost

Expenses that vary directly with the level of production output or sales volume, such as raw materials and direct labor costs.

Sales Revenue

Income earned from the sale of goods or services, representing the primary source of income for businesses involved in retail or wholesale trade.

Safety Margin

The difference between the actual performance of an entity and its break-even point.