BU121 Lecture Notes - Variable Cost, Fixed Cost
Document Summary
Decide when to change strategy in order to make more money. Abc company currently sells 400 units of a product at /unit and variable costs are /unit . Contribution per unit = 250 -150 = 100 per unit. Contribution margin = 1 150/250 =40% total $ contribution = 100/unit x 400 unit = 000. You have to run the numbers before deciding. Figure out are you better off or worst off. 30 000 x 40% contribution = 12 000 additional contribution. It looked like a 20 000 difference but when you run the calculation it is actually a 2000 dollars difference. There is not qualitative issues towards this so we can proceed the decision. 250 125 = 125 dollars contribution per unit. X 350 units = total contribution. Vs 000 additional contribution of . Qualitative issues? (can effect brand, is it worth the 3750 to make this decision) - 165 = contribution per unit.
