![]() ![]() He is thinking about moving operations overseas to cut fixed costs. Graham believes that his monthly sales revenue will only go as high as $1,020,000. To maintain this same level of profit, what sales volume (in sales revenue) must Graham now achieve? 2. They include such expenses as rent, insurance, dues. Therefore, Graham per month in fixed costs by moving operations overseas if he plans to maintain his prior profit level. Fixed expenses or costs are those that do not fluctuate with changes in production level or sales volume. Fixed costs are expenses that have to be paid by a company. If monthly sales are $1,020,000, by how much will he need to cut fixed costs to maintain his prior profit level of $156,000 per month? Fixed expenses can only be will have to save at least in order to maintain the prior profit level of $156,000 per month. Fixed Cost: A fixed cost is a cost that does not change with an increase or decrease in the amount of goods or services produced or sold. ( Fixed expenses Operating income ) + Contribution margin ratio = Target sales in dollars (Round your answer up to the nearest whole dollar.) Graham must now achieve sales of $ 1,360,000 to maintain the same level of profit. Expenses like rent or mortgage, insurance, salaries, and some utilities fall into the category of fixed expenses. To maintain this same level of profit, what sales volume (in sales revenue) must Graham now achieve? Begin by identifying the formula to compute the sales in units at various levels of operating income using the contribution margin approach. Fixed expenses are those expenses that stay the same regardless of your sales or business activity and can have a significant impact on your cash flow and budget. The company's monthly operating income, prior to these pressures, was $156,000. Graham's contribution margin has shrunk to 60% of revenues. See the cost-volume-profit analysis for more information. Graham feels like he's in a giant squeeze play: The automotive manufacturers are demanding lower prices, and the steel producers have increased raw material costs. For example, a software development company has a fixed cost requirement of 500,000 per month and essentially no cost per unit sold, so revenues of 400,000 per month will generate a loss of 100,000, but revenues of 600,000 will generate a profit of 100,000. The company has monthly fixed expenses of $660,000 and a contribution margin of 80% of revenues. If your loan requires other types of insurance like private mortgage insurance (PMI) or homeowner's association dues (HOA), these premiums may also be included in your total mortgage payment.Graham's Steel Parts produces parts for the automobile industry. Your mortgage lender typically holds the money in the escrow account until those insurance and tax bills are due, and then pays them on your behalf. If you have an escrow account, you pay a set amount toward these additional expenses as part of your monthly mortgage payment, which also includes your principal and interest. The "principal" is the amount you borrowed and have to pay back (the loan itself), and the interest is the amount the lender charges for lending you the money.įor most borrowers, the total monthly payment sent to your mortgage lender includes other costs, such as homeowner's insurance and taxes. Remember, your monthly house payment includes more than just repaying the amount you borrowed to purchase the home. ![]() If you use the 50/30/20 budget, wants can account for up to 30 of your spending. ![]() Using this rule, you can aim to spend your money in the following fashion: 50 on Needs: Allocate half of your monthly after-tax income to your needsthings like rent or mortgage payments, groceries, and utilities. These expenses may be harder to account for in a budget, as they don’t always come with a set monthly fee. These autofill elements make the home loan calculator easy to use and can be updated at any point. The 50/30/20 rule is one of the most commonand straightforwardsystems for monthly budgeting. Personal Personal variable expenses includes costs that are discretionary, unpredictable, one-time, unusual or that go up and down according to usage. Income tax tends to be highly variable according to income and expenses. Zillow's mortgage calculator gives you the opportunity to customize your mortgage details while making assumptions for fields you may not know quite yet. Some types of taxes such as property tax are typically a fixed expense.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |