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2. Historic cost

  • Cost that has been impacted by inflation
  • Cost already incurred
  • Cost that has gone up since original price

3. Units to produce and sell to achieve a Target Profit

  • Variable Cost + Fixed cost / Contribution per unit
  • Fixed cost + Target Profit / Contribution per unit
  • Variable Cost + Target Profit / Contribution per unit

4. Contribution margin ratio =

  • contribution / sales revenue x 100%
  • contribution / fixed cost per unit x 100%
  • contribution / cost revenue x 100%
  • contribution / cost of sales x 100%

5. Fixed cost

  • Remain constant (fixed) when changes occur to the volume of activity
  • Vary according to the volume of activity
  • It is a mixture of fixed and variable cost

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