COMM 200 Lecture Notes - Lecture 12: Fixed Cost, Profit Margin, List Price
27 Nov 2017
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Document Summary
Having a good understanding of cost base information will enable managers to better assess their financial options in the event of unexpected changes in market dynamics, unanticipated reductions in revenue and strategic positioning shifts which the organization is planning. Made up of the total costs associated with delivering the organization"s prod/serv to the marketplace. May include costs incurred as it manufactures, distributes, markets and sells. Variable (direct) costs- costs directly involved in manufacturing process. Fixed(indirect, invariable)- costs that are operational support costs. Variable versus fixed costs probably a multiple choice. Do not get confused with econ- indirect costs = fixed + committed. We will now look to build an understanding of the established cost base. This is accomplished by determining the various costs associated with the aspects of an organizations value chain. Understanding an organization"s cost base is essential to determining the required pricing strategy which will be utilized in marketing the product and its corresponding impact on profit.
