Business Administration 1220E Lecture Notes - Lecture 24: Net Profit, Gross Margin, Marketing Plan

• School: Western University
• Department: Business Administration
• Course: Business Administration 1220E
• Professor: Trina Ruthes

Document Summary

Business 1220e- lecture 24- introduction to marketing math. A marketing plan must be financially feasible (in other words must be financially reasonable) Marketing plan should be generating more profit than its total costs. Considerations of a marketing plan include: variable and fixed costs, investments, contribution. Variable cost is a cost that varies depending on the volume. Examples include: direct wages (commission, direct labour, cost of goods sold. Fixed cost is a cost that does not vary depending on the volume. Examples include: rent, depreciation, interest, manager salary. Think of variable and fixed cost as in the income statement under operating expenses. If it is same $ it is a fixed cost. If it is same % it is a variable cost. Examples include: trucks, buildings, land, furniture, computer. Two types of contribution analysis: unit contribution. Represents the gross profit after covering its cogs. Formula: unit contribution= selling price variable costs, total contribution.