Purchase Solution

Relationship of cost and sales volume

Not what you're looking for?

Ask Custom Question

Explain (utilizing specific examples) the relationship of costs and sales volume as it affects profitability.

Purchase this Solution

Solution Summary

The solution examines the relationship of cost and sales volume as it affects profitability. The expert utilizes specific examples.

Solution Preview

Explain (utilizing specific examples) the relationship of costs and sales volume as it
affects profitability.

Costs and sales volume is related to each other as when there is increase in sales volume, cost will also increase and it will affect the profitability of the company. For example, X firm produces and sells 10000 units of product A in a month.
Cost structure of product A is as follows:
Direct material $ 4 per unit
Direct labour $ 3 per unit
Variable manufacturing overhead per unit $ 2 per unit
Variable selling expenses per unit $ 1 per unit
Fixed manufacturing cost $ 6000 per month
Fixed selling cost $ 10000 per month

Selling price per unit $ 12
Total
Profitability statement per unit 10000
sales 12 120000
Less:variable cost
Direct ...

Purchase this Solution


Free BrainMass Quizzes
Six Sigma for Process Improvement

A high level understanding of Six Sigma and what it is all about. This just gives you a glimpse of Six Sigma which entails more in-depth knowledge of processes and techniques.

Organizational Leadership Quiz

This quiz prepares a person to do well when it comes to studying organizational leadership in their studies.

Basic Social Media Concepts

The quiz will test your knowledge on basic social media concepts.

Paradigms and Frameworks of Management Research

This quiz evaluates your understanding of the paradigm-based and epistimological frameworks of research. It is intended for advanced students.

Understanding the Accounting Equation

These 10 questions help a new student of accounting to understand the basic premise of accounting and how it is applied to the business world.