4 - are not changing by business activity, such as rental...

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Variable costs are expenses which changing in direct proportion bases on business activity. For example, if a company produces toys, and each month has different electrical costs, which depending on how many toys the company produces. In this case, the electrical expenses are the variable costs base on the number of producing toys in business activity. Fixed costs are the expenses which are not depending on the business activity. It tends to be time-related; in other word, it refers the unchanged costs in short term, which
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Unformatted text preview: are not changing by business activity, such as rental expenses and salaries. Contribution margin is the marginal project which is the amount remaining from sales deduces the variable expense. Also, contribution margin has covered the fixed costs in the period. For example, if a company has $1000 in sales and $500 in variable costs, the contribution margin is $500 because of $1000 (sales)- $500 (variable costs)= $500....
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This note was uploaded on 03/16/2010 for the course BA 213 taught by Professor Paschall during the Spring '09 term at Lane Community College.

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