Stellar Co. has the following sales, variable costs, and fixed costs. If sales increase by $10,000, then their profit increases or decreases by how much?
Sales = $50,000
Variable costs = $9,300
Fixed costs = $26,000
Variable Costs, and Fixed Costs:
Variable costs are the cost changes with the change in production activities As production increases then the variable cost will change and production activities decrease then the variable cost will also decrease and Fixed cost will remain the same.
Answer and Explanation: 1
Contribution Margin = Sales - Variable Cost
= $50,000 - $9,300
Contribution Margin = Fixed Cost + Profit
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fromChapter 23 / Lesson 7
Variable costs change in direct correlation with production and service levels when businesses produce goods or provide services. Explore the formula of variable costs, review key examples, and discover how variable costs fit into categorizing costs.