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    Relationship of cost and sales volume

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

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    https://brainmass.com/business/labour-management-and-relations/relationship-of-cost-and-sales-volume-258466

    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 ...

    Solution Summary

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

    $2.19

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