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When other factors are constant what is the effect on profits of an increase in fixed costs Of a decrease in variable costs?
From the perspective of the income statement and profits, there is no difference between bucketing costs in variable or bucketing them in fixed. The operating profit line of the income statement takes both costs into account so that an increase in one with an offsetting decrease in another will have zero impact to profits. Issue related to bucketing of certain items are normally internal discussions for a business and relate to various scorecards or metrics of interdepartmental performance. In most businesses there are separate mgrs and depts responsible for variable cost and fixed costs so the debate over where to bucket certain items is driven by whose scorecard they fall onto and ideally costs should be bucketed internally onto the scorecard of the mgr/dept with the greatest ability to influence those costs.
If SmartShop's profits have been growing at 5 percent per year This year their profits were approximately 500000 What were their profits last year?
SmartShop's profits have been growing at 5% per year. This year their profits were approximately $500,000. What were their profits last year?
If profits have been growing at 5 percent per year and this year profits are 500000 what was profits last year?
475000
What is cm ratio mean?
The CM ratio, or Contribution Margin ratio, is a financial metric that measures the percentage of sales revenue that exceeds total variable costs. It is calculated by dividing the contribution margin (sales revenue minus variable costs) by sales revenue. The CM ratio helps businesses understand how much revenue is available to cover fixed costs and contribute to profits after variable costs are accounted for. A higher CM ratio indicates a more profitable product or service.
Does dividend increase number of shares outstanding?
No, a dividend increase does not directly increase the number of shares outstanding. Dividends are cash payments made to shareholders from a company's profits, and increasing dividends means that the company is distributing more cash per share. However, if a company opts for a stock dividend instead, which involves issuing additional shares to shareholders, then the number of shares outstanding would increase.
Would you recommend variable costing or absorption costing as a source of information for managers?
I would recommend variable costing for managerial decision-making because it provides clearer insights into the impact of variable costs on profitability. This method helps managers understand how changes in production volume affect costs and profits, facilitating better budgeting and performance evaluation. Absorption costing, while useful for external reporting, can obscure the relationship between fixed costs and production levels, potentially leading to less informed decisions. Therefore, for internal management purposes, variable costing is generally more effective.
Which would be the most likely cause of an increase in cooprate dividends?
an increase of corporate profits
Why is net profit always greater in absorption costing than in direct costing?
Net profit is typically higher in absorption costing than in direct costing because absorption costing allocates all manufacturing costs, including fixed overheads, to the cost of goods sold. This means that when inventory is produced but not sold, some fixed costs remain in inventory on the balance sheet rather than being expensed, leading to higher reported profits. In contrast, direct costing only includes variable costs in the cost of goods sold, resulting in a more immediate recognition of fixed overhead expenses, which can lower net profit when inventory levels fluctuate.
What is Mcvities mission?
To increase profits
An increase in sales and profits generates the necessary cash required for economic growth?
An increase in sales and profits does not necessarily mean an economy will grow. The economy will only grow if the sales and profits are substantial in size.
What are international marketing objectives?
to increase profits
What will happen to profits and output levels when variable costs rise in a perfectly competitive industry?
When variable costs rise in a perfectly competitive industry, profits will decrease and output levels may decrease as well. This is because higher variable costs reduce the profit margins for firms, leading to lower overall profits. In response, firms may reduce their output levels to maintain profitability.
Advantages of capital from profits?
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How would you explain a large increase in dividends?
A large dividend increase typically signals a significant increase in profits.
What is balance sheet restructuring?
Balance sheet restructuring is the term used when a company reorganizes its structure to increase profits or to become more organized in its business practices. It may reorganize the ownership structure, the legal structure, or any one of a number of current practices that affect the bottom line.
Why is kesari dal used as an adulterant in dals?
To increase profits
How are products differentals is used to try to increase profits?
Products differentials are used to try to increase profits in different ways. This is a strategy that is known as diversification whereby a supplier offers varied products to consumers which increases the chances of making sales and eventually profits.
