الجمعة، 16 يناير 2015
Variable expenses increase when sales increase. They also decrease when sales decrease.
Fixed expenses do not increase when sales increase. Fixed expenses do not decrease when sales decrease. In other words, fixed expenses such as rent will not change when sales increase or decrease.
Some expenses are part variable and part fixed. These are often referred to as mixed or semi-variable expenses. An example would be a salesperson's compensation that is composed of a salary portion (fixed expense) and a commission portion (variable expense). Mixed expenses could be split into two parts. The variable portion can be listed with other variable expenses and the fixed portion can be included with the other fixed expenses.
The contribution margin ratio is the contribution margin divided by sales (revenues)
The ratio can be calculated using company totals or per unit amounts. We will compute the contribution margin ratio for the Oil Change Co. by using its per unit amounts: