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The relationship between price and quantity demanded holds true so long as it is complied with the ceteris paribus condition "all else remain equal" quantity demanded varies inversely with price when income and the prices of other goods remain constant. [3] If all else are not held equal, the law of demand may not necessarily hold. [4]
In business, Gross Margin Return on Inventory Investment (GMROII, also GMROI) [1] is a ratio which expresses a seller's return on each unit of currency spent on inventory.It is one way to determine how profitable the seller's inventory is, and describes the relationship between the profit earned from total sales, and the amount invested in the inventory sold.
When the quantity of the output varies from 5 shirts to 10 shirts, fixed cost would be 30 dollars. [1] In this case, the average fixed cost of producing 5 shirts would be 30 dollars divided by 5 shirts, which is 6 dollars. In other words, when 5 shirts are produced, 30 dollars of fixed cost would spread and result in 6 dollars per shirt.
In order to perform a profitability analysis, all costs of an organisation have to be allocated to output units by using intermediate allocation steps and drivers. This process is called costing. When the costs have been allocated, they can be deducted from the revenues per output unit. The remainder shows the unit margin of a product, client ...
In mathematical terms, if the demand function is = (), then the inverse demand function is = ().The value of the inverse demand function is the highest price that could be charged and still generate the quantity demanded. [3]
5. Impractical to assume sales mix remain constant since this depends on the changing demand levels. 6. The assumption of linear property of total cost and total revenue relies on the assumption that unit variable cost and selling price are always constant. In real life it is valid within relevant range or period and likely to change. [2]
Profitability index ... Life of the Machine = 5 Years; CFAT Year CFAT 1 18000 2 12000 3 10000 4 9000 5 6000 Calculate Net present value at 6% and PI: Year CFAT PV@10% ...
F/x p • (g 0 —g 1) The model form with 'q' and 'x' in place of' g 0 and g 1 allows profits to be calculated when only the sales and production figures are known. A spreadsheet could be prepared for a company with increasing then decreasing levels of sales and constant production. It could have another column showing profit under increasing ...