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An example of a committed fixed cost is insurance Most companies make a capacity decision frequently. A telephone bill, which includes a monthly base rate
An example of a committed fixed cost is insurance Most companies make a capacity decision frequently. A telephone bill, which includes a monthly base rate plus an extra fee for each of long-distance service, is an example of a variable cost. Managers can very spending levels broadly in the short run. A final product or service has only one cost driver. A change in the tax rate will not affect the break-even point Selling expenses are found in the cost of goods sold Contribution margin = sales price - all variable expenses. An increase in sales price would cause a decrease in the break-even point The CVP graph shows profit and loss at any rate of activity Gross profit margin is the sales price minus the variable cost per unit. Costs may behave in a linear and nonlinear way
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