Fixed cost is a cost that does not modify with an increase or decrease in the amount of goods or services produced. Fixed costs are everyday expenditure that has to be paid by a company, self-governing of any business goings-on. It is one of the two mechanism of the total cost of a good or service, along with variable cost.
It can be defined as the marginal profit earned by a firm or a business at the sale of each unit of the product. Contribution margin is used to measure the profitability of a product for a company and helps in deciding the future
Cost volume profit analysis is a method of analyzing the affect of transition of cost and volume on the net income and operating income of a business. It is a method of cost accounting and is used to make short term financial decisions regarding
Manufacturing Overhead Budget: Learning Objective of the article: Define and explain manufacturing overhead budget. Prepare a manufacturing overhead budget. The manufacturing overhead budget provides a schedule for all costs of production other than direct materials and direct labor. Example of a Manufacturing Overhead Budget:
Advantages of Variable or Direct or Marginal Costing System Learning Objectives: What are the advantages of variable costing system? Why absorption costing continues to be used almost exclusively for external reporting purposes? Variable costing has the following main advantages: The data that are required
Cost Volume Profit (CVP) Consideration in Choosing a Cost Structure: Definition and Explanation of Cost Structure: Cost structure refers to the relative proportion of fixed and variable costs in an organization. An organization often has some latitude in trading off between these two types
Sale Mix and Break Even Analysis With Multiple Products: Learning Objectives: Calculate break even point when a company sells more than one product. Sale mix–Definition and Explanation of the Concept: The term sale mix refers to the relative proportion in which a company’s products