MKT 300 Chapter Notes - Chapter 6: Fixed Cost, Variable Cost, Sales Promotion
30 Sep 2016
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Chapter 6: fixed, variable costs, cm, profit margin, break-even, target volume, Variable costs: costs that increase directly with unit sales volume: variable costs can be expressed into a total or on a per-unit basis. Fixed costs: costs that do not change with the number of units sold or produced: a horizontal line across a graph. Total costs ($) = total variable costs ($) + fixed costs ($) Total variable costs ($) = unit volume (#) x variable cost per unit ($) The linear equation y = mx + b explains the relationship between total costs and unit volume: y- company"s total cost, m- variable cost per unit, x- quantity of products sold/produced, b- fixed cost. Total cost ($) = variable cost per unit ($) x quantity (#) + fixed cost ($) It is also possible to calculate total cost per unit or unit total cost or average total cost: total cost per unit falls as quantity rises.
