5: Marketing and Accounting Fundamentals (Keeping Your Nose above Water)
- Page ID
- 22095
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This chapter introduces the global model of the relationship between costs and revenues. It shows the overall cost structure of a business and introduces models for developing total costs and total revenues. It explains how you calculate net income and contribution margins. Armed with all of this knowledge, you can then answer the break-even question: How much does the business need to sell to cover its costs?
- 5.0: Introduction
- When a new retail store opens in your neighborhood strip mall, you wonder whether it will still be running six months or a year from now. Do its owners know how much merchandise they have to sell to cover their costs? Will any money be left over to help grow the business?
- 5.1: Cost-Revenue-Net Income Analysis (Need to Be in the Know)
- This section explores the various types of costs and establishes a model relating total costs to total revenues to determine total profitability levels. You will then apply this model to see how the sale of an individual product contributes to covering costs and how each product individually contributes to overall profitability.
- 5.2: Break-Even Analysis (Sink or Swim)
- Simply looking at the fixed costs, variable costs, potential revenues, contribution margins, and typical net income is not enough. Ultimately, all costs in a business need to be recovered through sales. Do you know how many units have to be sold to pay your bills? The answer to this question helps assess the feasibility of your business idea.
- 5.CS: Case Study: Forecasting the Impact of Revenue and Cost Changes
- Case study: Lightning Wholesale has just wrapped up the 2013 fiscal year of operations. As with all businesses, revenues, costs, and expenses are forecasted to change in 2014. Top management needs to know the impact of these changes on its 2014 operations. This is best completed by performing a year-over-year analysis of 2013 to 2014.
- 5.E: Marketing and Accounting Fundamentals (Exercises)
- Case study: Lightning Wholesale has just wrapped up the 2013 fiscal year of operations. As with all businesses, revenues, costs, and expenses are forecasted to change in 2014. Top management needs to know the impact of these changes on its 2014 operations. This is best completed by performing a year-over-year analysis of 2013 to 2014.