Practical Direct Costing

Variable Costing
Knowledge Center

 
Variable Costing > Forum

New Topic


Lisena Giordano
Business Consultant, Italy
🔥NEW It Solves the Problem of Classification of Variable Costs with Non-subjective Speculations. At first sight, a blast furnace to melt metals, which uses gas, electricity or coal, should consider this cost as variable, because it depends on the production. But it is practically not to impute this cost directly in the invoice to the customer, so we use an unorthodox but effective method: In a reclassification of the income we treat this cost as FIXED. 1,000,000100%turnover Variable costs450,00045% Contribution margin550,00055% Fixed costs200,00020% Electricity50,000 5% Operating profit300,00030% The contribution marginthe firm will usein its management ofquotes and ordersis 55% (because variable costs450,00045%, contribution margin550,00055% and 1,000,000100%turnover). So by adding to the value of the variable contribution margin as a percentage of the price we get, we note that the contribution margin covers the cost of electricity. If, however, we will (...) Read more? Sign up for free

 

More on Variable Costing
Summary
Forum
Practical Direct Costing
Is Depreciation regarded as a Direct Cost?
Variable Costing for Decision-making
Variable Costing Definition
Special Interest Group

Are you interested in Variable Costing? Sign up for free

Notify your students

Copy this into your study materials:

and add a hyperlink to:

Link to this discussion

Copy this HTML code to your web site:


Variable Costing
Knowledge Center

 


About 12manage | Advertising | Link to us / Cite us | Privacy | Suggestions | Terms of Service
2021 12manage - The Executive Fast Track. V15.7 - Last updated: 26-1-2021. All names of their owners.