Contribution Margin, Gross Profit, Managerial accounting
Not what you're looking for?
1. What are the similarities between contribution margin and gross profit.
2. Steven started ZZ Tire Company 10 years ago. The company started as an installer and seller of tires. The company has now expanded to the point where they now manufacture tires in China to supply the retail stores. They have retail sales of over $10 Million a year. Right now, the only accounting that takes place is regular bookkeeping for tax purposes. The company performs no managerial accounting. Write out a couple of paragraphs where you tell Steven why he should implement managerial accounting, and explain to him what managerial accounting is. Go through basic points explaining why it is important to implement managerial accounting.
Purchase this Solution
Solution Summary
This solution of 240 words discusses similarities between contribution margin and gross profit as well as discusses benefits of managerial accounting. References used are included.
Solution Preview
Gross profit is the difference between sales and cost of goods sold. Contribution margin is sales per unit minus variable costs per unit. Both contribution margin and gross profit are similar in nature that these two allow a firm to make production decisions. In both the cases, the sales figure and variable expenses are used from the income statement and variable expenses are reduced. However, in the case of gross profit, the costs of goods ...
Education
- BCom, SGTB Khalsa College, University of Delhi
- MBA, Rochester Institute of Technology
Recent Feedback
- "Thank you. "
- "Thank you"
- "Thank you. I got 20/20 last week for my discussion you help me out with."
- "Thank you. Great Job. "
- "Thank you. Great Job. "
Purchase this Solution
Free BrainMass Quizzes
Marketing Research and Forecasting
The following quiz will assess your ability to identify steps in the marketing research process. Understanding this information will provide fundamental knowledge related to marketing research.
SWOT
This quiz will test your understanding of the SWOT analysis, including terms, concepts, uses, advantages, and process.
Writing Business Plans
This quiz will test your understanding of how to write good business plans, the usual components of a good plan, purposes, terms, and writing style tips.
Introduction to Finance
This quiz test introductory finance topics.
Production and cost theory
Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.