Cost, Volume, and Profit Formulas

Cost, Volume, and Profit Formulas - Failing is not an...

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Failing is not an option for any business and for that reason profitability is the most important for a company. To continue a successfully a company, there must have precise stats for accountants to determine if a company is losing money or making money. The cost-volume- profit usually can tell a company on how a company profit will be in the near future. There are three different contribution ratios for a company. One, is a company is operating at a loss. The other area is break-even point or a point in which a company only cope from its operating cost and revenue. The last one is a company may be cost-effective and is beyond all its expenses. By contribution margin per unit dividing by the unit selling price is how to get the contribution ratio. To get the contribution margin per unit is to take the unit selling price and minus the unit variable cost. The fixed cost divided by unit contribution margin and fixed costs divided by the unit contribution ratio will be the break-even point in dollars.
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