Organisational activities are responsible for determining the cost variable nature of the manufacturing processes’ cost elements. The quantity of products produced is not affected by fixed costs. Fixed expenses can be incurred without regard to productivity. Fixed expenses have one characteristic: they are constant over a period of time. Fixed expenses can be affected by changes from external sources such as revisions to government licensing fees. These fixed costs can be time dependent and will decrease as manufacturing units increase. Variable expenses are costs that vary with production. Variable costs are dependent upon the output. The unit cost is the same regardless the output of the factory. These are affected both by internal and externe manufacturing variables. Semi-variable costs are both fixed and variable (De Luca 2018, 2018). If the energy base rate is set, then the price will rise as output or consumption levels increase. Step costs are expenditures that stay constant at a given level, but rise or fall when they reach a specific threshold. Employees are attracted by perks and subscription plans. It is important to perform breakeven analysis in every business context. This is especially true when making critical decisions. Based on market research, this will estimate the sales volume for a product, and give information about how realistic it is. The contribution margin and breakeven analysis help to determine the price at which the company will make the desired profit margin. The only method to determine sales volume, estimate costs and profit margins is breakeven analysis (Sintha 2020). The contribution margin and breakeven report can be used to estimate the sales needed for a company to earn the required profit.
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
