A company sells 15,000 units of product per month. the sales price per unit is $5.00, variable costs are $2.80 per unit, and total fixed costs equal $3,000. the contribution margin ratio is 44%.
15000 + 15% ( $2.80 + $3,000) x 20% = 44%.
In accounting and economics, 'fixed fees', also known as indirect expenses or overhead costs, are business expenses that are not dependent on the level of products or offerings produced by means of the commercial enterprise.
- They have a tendency to be recurring, consisting of interest or rents being paid in step with the month. those expenses also have a tendency to be capital expenses. Examples of constant fees are lease and rent charges, salaries, application payments, coverage, and loan repayments. a few varieties of taxes, like business licenses, are also constant costs. for the reason that you have to pay fixed charges no matter how awful lot you promote, you ought to be cautious approximately adding constant costs on your small business.
- fixed prices are fees that don't change whilst income or production volumes boom or decrease. that is due to the fact they're no longer directly related to producing a product or handing over a provider.
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