Search results
Results from the Tech24 Deals Content Network
Cost breakdown analysis. Components of price. Image according to Garrett (2008), figure 4-1, p.65. In business economics cost breakdown analysis is a method of cost analysis, which itemizes the cost of a certain product or service into its various components, the so-called cost drivers. The cost breakdown analysis is a popular cost reduction ...
For example, the analysis can be used in establishing sales prices, in the product mix selection to sell, in the decision to choose marketing strategies, and in the analysis of the impact on profits by changes in costs.
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.
Markup price = (unit cost * markup percentage) Markup price = $450 * 0.12 Markup price = $54 Sales Price = unit cost + markup price. Sales Price= $450 + $54 Sales Price = $504 Ultimately, the $54 markup price is the shop's margin of profit. Cost-plus pricing is common and there are many examples where the margin is transparent to buyers. [4]
Contribution margin (CM), or dollar contribution per unit, is the selling price per unit minus the variable cost per unit. "Contribution" represents the portion of sales revenue that is not consumed by variable costs and so contributes to the coverage of fixed costs. This concept is one of the key building blocks of break-even analysis.
The break-even point (BEP) in economics, business —and specifically cost accounting —is the point at which total cost and total revenue are equal, i.e. "even". In layman's terms, after all costs are paid for there is neither profit nor loss. [1] [2] In economics specifically, the term has a broader definition; even if there is no net loss ...
An important part of standard cost accounting is a variance analysis, which breaks down the variation between actual cost and standard costs into various components (volume variation, material cost variation, labor cost variation, etc.) so managers can understand why costs were different from what was planned and take appropriate action to ...
Cost benchmarking is the measurement, refinement and analysis of one's Cost of Goods Sold (COGS) when compared to market peers. Cost benchmarking identifies competitiveness of pricing in industry terms, highlighting best in class [ 1 ] pricing and subsequently showing areas for competitive pricing improvement.