BCOR 2400 Basic Marketing Accounting

BCOR 2400 Basic Marketing Accounting - The Profit Equation...

Info iconThis preview shows pages 1–5. Sign up to view the full content.

View Full Document Right Arrow Icon
The Profit Equation The Profit Equation Profit = Revenues – Expenses or Profit = Revenues - Costs
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Costs Variable Costs Costs that change as activity levels change. Often times we will talk about unit variable costs. Per unit, variable costs will remain the same unless the change in the number of units produced is large. The total variable costs (quantity * unit variable cost) will change as the units produced change. Fixed Costs Costs that do not change over the short term, or with the level of activity.
Background image of page 2
Contribution or Gross Profit Contribution or Gross Profit is found by subtracting all variable expenses from sales revenue. This often is determined per unit, but can also be determined in total. The idea is that what is left “contributes” to covering fixed costs and to profit. Sales Revenue Price Per Unit -Variable Costs -Variable Cost Per Unit Contribution Per Unit Contribution
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Breakeven Analysis Breakeven Quantity = Fixed Costs Unit Price – Unit Variable Cost Breakeven Quantity = Fixed Costs Unit Contribution
Background image of page 4
Image of page 5
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 05/03/2008 for the course BCOR 2400 taught by Professor Rexmoody during the Spring '08 term at Colorado.

Page1 / 15

BCOR 2400 Basic Marketing Accounting - The Profit Equation...

This preview shows document pages 1 - 5. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online