All Posts in Category: Bookkeeping

Variable production costs will no longer be $60 per unit, fixed production costs will no longer be $20,000 per month, and mixed sales compensation costs will also change. All these costs will change because the estimates are accurate only in the short term. Cost-Volume-Profit (CVP) analysis is a crucial tool that helps businesses understand the…

Imagine that you have a machine that creates new cups, and it costs $20,000. To make a new cup, you have to spend $2 for the raw materials, like ceramics, and electricity to power the machine and labor to make each product. You can even calculate the contribution margin ratio, which expresses the contribution margin…