Profitability Analysis CONTRIBUTION MARGINCOST 盈利能力分析贡献利润率成本.pptVIP

Profitability AnalysisCONTRIBUTION MARGIN (COST VOLUME PROFIT)CHAPTER 6 marketing costs money BA 315- MARKETING MANAGEMENT (L.P. CHEW) Profitability analysis is the assessment of the impact of various marketing strategies and programs on the profit contribution that can be expected from a product or product line. Variable costs vary with sales volume, whereas fixed costs remain the same regardless of volume levels. The percentage variable contribution margin indicates thepercentage of each additional sales dollar that will heavailable to help the firm cover its fixed costs andincrease profits. Direct fixed costs are incurred by a specific product orservice; indirect fixed costs, are incurred to support thetotal business. Indirect costs can be broken into two categories: 1. Traceable costs are indirect costs that can be allocated to various products on some nonarbitrary basis. 2. Nontraceable costs are not assigned to individual products. Fixed and variable cost identification allows managers to examine some of the profitability implications of pricing and marketing expenditure decisions on cost volume profit relationships and its implications for marketing budgets. Economies of scale exist when a large portion of totaloperating costs are fixed and large changes in volumeresult in significant changes in average cost perproduct. Many firms employ minimal fixed cost strategies, potential negative consequence economies ofscale.As a firm becomes more experienced in producing aproduct, variable costs decrease as volume increases. Phenomenon is experience curveeffect. Semifixed (stepped) costs Semifixed costs are costs that dont vary automatically on a per unit basis, but may change if substantial decreases in volume take place. Increased demand will result in average costs increasing temporarily if a step up in certain fixed costs is necessary. Retailers are interested physical assets and inventory investment. I