BU247 Lecture Notes - Lecture 2: Fixed Cost, Variable Cost, Contribution Margin
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1 (cid:3032) +(cid:1876)(cid:1857)(cid:1856) (cid:1867)(cid:1871)(cid:1872)(cid:4667) / contribution margin per unit: ex. If you wanted to find out how many units to sell to breakeven, the. If you wanted to find out how many units you have to sell to gain target profit would be 0. If you wanted to find out how many units to sell to gain , the target profit would be 50. Cost classification and target profit: code each item as fixed or variable cost, add up all variable costs, add up all fixed cost, divide variable costs by units produced to get variable cost per unit, when classifying, ex. Carpenter labour vs. salary: salary is always fixed, carpenter labour would be variable because their pay could depend on how (cid:373)uch they produce or how (cid:373)a(cid:374)y hours worked si(cid:374)ce it does(cid:374)"t specify that it is a salary.
