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non-linear costs and revenues are ignored by the model

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12y ago

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Does costs may behave in a linear or nonlinear way?

Costs can behave either in a linear or nonlinear manner depending on various factors. Linear costs increase at a constant rate with changes in production or activity levels, while nonlinear costs may exhibit variable rates of increase due to economies of scale, fixed costs, or variable costs that change with volume. For example, bulk purchasing can reduce per-unit costs, leading to a nonlinear cost structure. Understanding the nature of costs is crucial for effective budgeting and financial planning.


Profit is calculated by subtracting costs from?

Profit is calculated by subtracting operating costs from gross revenues.


What is the inventory method that assigns the most recent costs to revenues?

Lifo (Last in first out) is the method which assigns the most recent costs to revenues.


The costs of goods and services used in the process of earning revenues are called?

A business or company has expenses. Expenses include the costs of goods and services that are used in the process of earning revenues.


What accurately explains how profit is calculated?

Costs are subtracted from revenues.


What are revenues minus costs?

Revenue - Cost = Gross profit


What do you call when total revenues equal total costs?

Breakeven.


For a firm to operate in the shortrun the total revenue must at least be equal to Why?

A firm would still operate if revenues are below total coots, but not if revenues are below variable costs. The reason is that as long as revenues are above variable costs, the firm will earn a difference to contribute to the fixed costs (fixed costs are costs that a company has to pay in the short-run whether it operates or not). If the firm stops operating in the short-run, it will have to pay for the full fixed costs (e.g., rent, some fixed labour) If revenues are below variable costs, for every unit of production, the company loses the difference and does not contribute to the fixed costs. It is more economical to shutdown in the short-run.


What is a responsibility center that incurs costs and expenses and generates revenues?

It is a Profit Center


Why is motive considered an incentive in a market system?

Minimize costs and maximize revenues.


What is a typical percent of labor costs to gross revenues for the average business?

42


What are profit centers accountable for?

Profit centres are accountable for revenues, costs, and, consequently, profits.