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Improving Profit: Using Contribution Metrics to Boost the Bottom Line by Keith N. Cleland

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Definition of Terms

Activity refers to the key activity fundamental to and driving all other activities. It can be the billed production-hours1 or minutes, number of sales, meals (covers) served, tons per mile, skins tanned, and so forth.

Actual vs. Potential refers to the actual output of a business compared with its potential output, given the available resources of personnel, equipment, and technology.

Added Value refers to the amount added to the cost of materials/goods toward covering expenses plus profit. Applied as an add-on to cost of materials/goods, it is also referred to as Gross Profit or Gross Profit Contribution or, simply, ...

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