C10 Pricing 2010

C10 Pricing 2010 - Chapters 10 and 11 Fixed costs (FC): do...

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Chapters 10 and 11
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Fixed costs (FC): do not change per unit One-time (i.e., setup costs) Ongoing (i.e., facilities, salaried labor) Variable costs (VC): change on a per-unit basis Unit costs (i.e., materials, hourly labor) Can change with quantity
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Contribution margin = Revenue – VC Unit Contribution Margin = Price/unit – VC/unit “Margin” = Contribution Margin as a percent of sales (Kotler calls it Markup on price) “Mark-up” = Contribution Margin as a percent of VC (Kotler calls it Markup on cost)
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Chicago-style dogs for $5 a piece $3 cost per unit (ingredients)
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What is the unit contribution margin(UCM) in dollars? What is the margin? What is the mark-up? Why is it called a contribution margin? Chicago-style dogs for $5 a piece $3 cost per unit (ingredients) 3 Minute Drill
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What is the unit contribution margin (UCM) in dollars? UCM = P – VC = $5– $3 = $2 What is the margin? Margin = UCM / P = $2 / $5 = 40% What is the mark-up?
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This note was uploaded on 04/22/2011 for the course BUS M 341 taught by Professor Scottsmith during the Fall '10 term at BYU.

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C10 Pricing 2010 - Chapters 10 and 11 Fixed costs (FC): do...

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