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SALES=F.C+D.P/P/V RATIO
MARGIN OF SAFETY ;
MOS=PROFIT/P/V RATIO
DIFFERENCE BETWEEN CONTRIBUTION
&PROFIT
Includes fixed cost & Does not include fixed
profit . cost.
Based on marginal cost Based on common man
concept. concept.
Contribution above break Profit is expected only
even contributes to profit. after covering variable
Contribution analysis and fixed cost.
requires a knowledge of Profit does not require
break even concept. any such concept.
APPLICATION OF MARGINAL COST & COST,
VOLUME & PROFIT ANALYSIS-
COST CONTROL.
PROFIT PLANNING.
EVALUTION OF PERFORMANCE.
DECISION MAKING.
FIXATION OF SELLING PRICE.
KEY LIMITING FACTOR.
SUITABLE PRODUCT MIX.