BUS-A 202 Chapter 3: Chapter 3 Notes

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4 Feb 2019
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Helps managers make many important decisions, such as what products and services to offer, what prices to charge, what marketing strategy to use, and what cost structure to maintain. Selling prices, sales volume, unit variable costs, total fixed costs, mix of products sold. Costs are linear and can be accurately divided into variable and fixed elements. The contribution income statement emphasizes the behavior of costs and therefore is extremely helpful to managers in judging the impact on profits of changes in selling price, cost, or volume. Sales, variable expenses, and contribution margin: contribution margin. The amount remaining from sales revenue after variable expenses have been deducted. The amount available to cover fixed expenses and then to provide profits for the period. For each additional speaker the company sells during the month, more in contribution margin becomes available to help cover the fixed expenses.

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