ACCT-2020 Lecture Notes - Lecture 4: Earnings Before Interest And Taxes, Contribution Margin, Fixed Cost
Document Summary
Contribution margin = sales-variable costs (both period & product costs) Each add 1 unit sold covers fixed costs by contribution margin/unit. Sp , vc , volume , fc . Sp , vc , volume 15, fc . Increased by for +5 volume of footballs. Fixed expenses are ,000 per month and the company is selling 2,000 units per month. The marketing manager argues that a ,000 increase in the monthly advertising budget would increase monthly sales by ,000. Calculate the increase or decrease in net operating income. Management is considering using higher-quality components that would increase the variable expense by per unit. The marketing manager believes that the higher-quality product would increase sales by 10% per month. One of the company"s products, a small camp stove, sells for per unit. Variable expenses are per stove, and fixed expenses associated with the stove total ,000 per month.