The Total Revenue And Total Cost

Asset turnover (T/O) demonstrates how effective the asset base is in generating top line revenue. High T/O values have implications in terms of plant structure, level of backward integration, and aggressiveness of pricing policy. CUMULATIVE PROFITS Formula Cumulative Profits is the total Description of all year 's Net Profit. :

15. In pure competition, each extra unit of output that a firm sells will yield a marginal revenue that is ( )

Objective: Analyze the effect of changes in marginal revenues and costs on a firm’s profit-making potential.

Next there is total cost and total revenue. Total cost is what the company spends to produce a certain quantity of its product. This includes the cost of all the materials,

When a firm wants to determine its optimal level of output using marginal revenue and marginal cost the firm needs these two to be equal. Marginal revenue is a change in the total revenue when one or even more units of output are sold. Marginal cost is the cost associated with producing one or more units. Optimal level of output is the desired level of goods or even service that is produced by a company. When the revenue and the cost become equal then the firm that uses profit maximization to determine the optimal level of output has succeeded.

dollar of sales. It is used to determine its profit margin. If you analyze Net Income to Net sales

net operating income will tend to move up and down in response to changes in levels of production.

Refer to the diagram. If price is reduced from P1 to P2, total revenue will:

unit, two types of costs are distinguished. Firstly the direct costs, consisting of the direct

In vertical analysis, it is easier to see elements as a percentage of Revenue. Between 2011-12, the portion that cost of sales takes in revenue has increased however, there is a bigger deterioration in distribution cost. In 2011, 9.21% of revenue remains as profit but in 2012 this figure decreases to 8.14%. Despite reduction in costs is one of the strategies of Ted Baker(part 1.4), analysis illustrates that costs increase each year.

marginal cost – so that the sale still produces a positive contribution to fixed costs.

A profit maximising perfectly competitive firm should select the output level at which the difference between the marginal revenue and marginal cost is greatest. This is equivalent to selecting the output where the spread between total revenue and total cost is greatest.

The profit per customer may be obtained once certain other data are collected. For example the cost per new customer may be determined

This equation is solved for the sales volume in units. c. In the graphical approach, sales revenue and total expenses are graphed. The break-even point occurs at the intersection of the total revenue and total expense lines. 8-2 The term unit contribution margin refers to the contribution that

The cost incurred by the function should be compared with the results accomplished e.g. sales volume achieved, gross margins achieved and net realization made.