Sales aren't any sort of cost. They are the opposite of costs.
Sales Commission varies with volume of sales that's why it is a variable cost as much the sales as much the sales commission, high sales high sales commission and vice versa.
Sales commission is a variable cost because the amount of the account is subject to variation. Think about it: A used car salesman is paid a commission say of $500 for every car he sells for the month of October. If he sells only 2 cars, then the sales commission is $1000, If he sells a whopping 12 cars, then the sales commission is $6000!! Notice the variation in commission?? This is why it is a variable cost - because it is not a fixed cost, which you know regardless of what happens during the period.!
The sales price includes variable cost, the cost of the unit and the markup. Sales price is the rate customers pay for the item.
If it varies with the level of production then it is variable cost otherwise it is fixed cost.
Breakeven point = Fixed Cost / Contribution margin Contribution margin = (Sales - Variable cost) / Sales
If Variable cost and sales ratio is provided then by using mathematical equation approach mixing figures can be found by using provided figures. Sales = Variable cost + Sales percentage of (Variable cost)
Sales Commission varies with volume of sales that's why it is a variable cost as much the sales as much the sales commission, high sales high sales commission and vice versa.
Sales commission is a variable cost because the amount of the account is subject to variation. Think about it: A used car salesman is paid a commission say of $500 for every car he sells for the month of October. If he sells only 2 cars, then the sales commission is $1000, If he sells a whopping 12 cars, then the sales commission is $6000!! Notice the variation in commission?? This is why it is a variable cost - because it is not a fixed cost, which you know regardless of what happens during the period.!
sales-variable cost= contribution
The sales price includes variable cost, the cost of the unit and the markup. Sales price is the rate customers pay for the item.
If it varies with the level of production then it is variable cost otherwise it is fixed cost.
You cannot. Sales and variable costs must be functions of the units (quantities) sold and produced.
The Profit Volume (PV) Ratio is the ratio of Contribution over Sales. It measures the Profitability of the firm and is one of the important ratios for computing profitabilty. The Contribution is the extra amount of sales over variable cost. Contribution is also Fixed cost plus profit. Profit = Sales - Variable Cost - Fixed Cost. Thus Contribution is: Profit + Fixed Cost = Sales - Variable Cost. Therefore PV Ratio = (Contribution/Sales)X100. (This as a percentage of sales)
Breakeven point = Fixed Cost / Contribution margin Contribution margin = (Sales - Variable cost) / Sales
The Profit Volume (PV) Ratio is the ratio of Contribution over Sales. It measures the Profitability of the firm and is one of the important ratios for computing profitabilty. The Contribution is the extra amount of sales over variable cost. Contribution is also Fixed cost plus profit. Profit = Sales - Variable Cost - Fixed Cost. Thus Contribution is: Profit + Fixed Cost = Sales - Variable Cost. Therefore PV Ratio = (Contribution/Sales)X100. (This as a percentage of sales)
Sales Commission varies with volume of sales that's why it is a variable cost as much the sales as much the sales commission, high sales high sales commission and vice versa.
Break even point = Fixed cost / Contribution margin ratio Contribution margin ratio = (sales - variable cost ) / Sales