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Cost per unit information is needed in order to set prices high enough to generate a profit. The cost per unit is derived from the variable costs and fixed costs incurred by a production process, divided by the number of units produced. Variable costs, such as direct materials, vary roughly...
Calculate the average cost per package: Add up one month’s total shipping costs and divide by the number of packages shipped. Use this as a baseline for setting your rates. What are typical shipping costs? Costs vary by carrier and a series of factors such as the number of packages, wei...
Once you’ve determined the appropriate employees, it’s time to calculate an hourly rate. Here you can take one of two approaches: if there’s a close salary range across AP employees, you might create an average monthly salary divided by 160 hours. If there’s a big discrepancy in indi...
It ensures the accuracy of the average inventory calculation and enables businesses to calculate the cost of goods sold (COGS), assess inventory turnover, and make informed inventory management decisions. Now that we have a clear understanding of how to determine the beginning and ending inventory,...
Looking at the lifetime value of a customer in relation to the cost of acquiring that customer can give you additional insights into the potential return on your initial investment. There are multiple ways you might calculate lifetime value. Here is one formula you might try: Custome...
To calculate economic profits, one must account for the alternative actions that could’ve taken place when making a decision. On the other hand, accounting profits do not consider opportunity costs but is instead calculated based on measurable book values. Thus, economic profits are often used t...
In the allowance method of accounting, how do you calculate and record the amount for the allowance for doubtful accounts? How to prepare journal entry accounts receivable with bad debt expense? A company reports the following: Sales $1,333,710 Average accounts receivable (net) 63,510 Determine...
Learn what inventory costs retailers need to keep track of, how to calculate total inventory costs, and how to reduce them.
Customer acquisition cost is the total cost of acquiring a single customer, and lowering it can make your sales margins that much bigger.