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1. Segregation of total costs into its fixed and variable components is always a daunting task to do. 2. Fixed costs are unlikely to stay constant as output increases beyond a certain range of activity. 3. The analysis is restricted to the relevant range specified and beyond that the results can become unreliable. 4.
Direct selling is a business model that involves a party buying products from a parent organization and selling them directly to customers. It can take the form of either single-level marketing (in which a direct seller makes money purely from sales) and multi-level marketing (in which the direct seller may earn money from both direct sales to customers and by sponsoring new direct sellers and ...
Identifying a break-even point helps provide a dynamic view of the relationships between sales, costs, and profits. For example, expressing break-even sales as a percentage of actual sales can help managers understand when to expect to break even (by linking the percent to when in the week or month this percent of sales might occur).
By nature or traceability: Direct costs and indirect costs. Direct costs are directly attributable/traceable to cost objects, while indirect costs (not being directly attributable) are allocated or apportioned to cost objects. By function: production, administration, selling and distribution, or research and development.
Cost-plus pricing is a pricing strategy by which the selling price of a product is determined by adding a specific fixed percentage (a "markup") to the product's unit cost. Essentially, the markup percentage is a method of generating a particular desired rate of return.
A simplified cash flow model shows the payback period as the time from the project completion to the breakeven. In economics and business, specifically cost accounting, the break-even point (BEP) is the point at which cost or expenses and revenue are equal: there is no net loss or gain, and one has "broken even".
the sum of input costs incurred in producing output (the cost price) is equal to the production capital advanced. fixed capital advanced is equal to fixed capital consumed, i.e. there is no depreciation of fixed capital. All output is sold at once, there is no problem with selling anything. There are no variations in the turnover of capital.
Yet, if an enterprise owns its own buildings, machinery and equipment, most of the costs associated with their use are not recorded under intermediate consumption; depreciation charges are included in gross value added, and interest costs, both actual and implicit, are included in net operating surplus. Only the expenses of materials needed for ...