Learn about direct fixed costs, with examples of how they relate to products.
- Your products and your sales are all you've got…to make your business profitable…and generate financial gains.…Understanding profitability at a product level…is important because not all products…have been created equal when it comes to profitability.…Let me explain this further.…If your company sells many products,…some of them will generate a lot of profits.…Some of them, not so much and some of them…will barely cover their own cost.…The reason is that there are many factors at play…that influence the amount that you can sell…your products for.…
And therefor, the profits you can get in return.…The price of your product and the revenue it will generate…and therefor the profit it will bring…depend on several factors.…What it will cost you to produce it.…What your customers are ready to pay for it…and how much your competition is offering it for.…And sometimes it's going to be your strategy…that will determine the prices of your products.…For example, let's discuss theme parks.…Their entrance tickets are priced in a way to make it…
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- Identify the purpose of cost-accounting.
- Define product profitability.
- Determine your baseline.
- Gather revenue and cost information for your analysis.
- Connect targets with profitability.
- Build your target baseline.
- Analyze pricing.
- Calculate probable product profitability.