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Marginal Profitability Analysis
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Marginal Profitability Analysis
Course Overview:
Course Overview:
Marginal profitability analysis provides relevant decision information for setting prices, product design, and product profitability. Analysis of whether to open or close locations or divisions can also be done with marginal profitability analysis.
The course starts by defining marginal costs and marginal profits and then explains how to calculate marginal profitability. You will learn how to create cost-volume-profit (CVP) analyses and breakeven analysis. Marginal profitability is compared to traditional full absorption product costing or activity-based costing to identify the pros and cons of each method and when each is appropriate.
The course provides practical examples of making decisions with marginal profitability analysis. Examples include determining optimal production amounts and which products to promote. The final section explains how to calculate the change in profitability from a price increase and a price decrease. A worksheet template is provided for this analysis.
The course starts by defining marginal costs and marginal profits and then explains how to calculate marginal profitability. You will learn how to create cost-volume-profit (CVP) analyses and breakeven analysis. Marginal profitability is compared to traditional full absorption product costing or activity-based costing to identify the pros and cons of each method and when each is appropriate.
The course provides practical examples of making decisions with marginal profitability analysis. Examples include determining optimal production amounts and which products to promote. The final section explains how to calculate the change in profitability from a price increase and a price decrease. A worksheet template is provided for this analysis.
Learning Objectives:
Upon completion of this course, you will be able to:
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Explore the definitions of marginal costs and marginal profitability
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Discover how to use a cost-volume-profit analysis and breakeven analysis
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Identify the pros and cons of using marginal profitability analysis, activity-based costing, and traditional full absorption costing.
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Explore the following keys factors to profitability: cannibalization, excess capacity, and step-fixed costs
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Recognize the best uses for marginal profitability analysis
Course Number:
RS04
NASBA Field of Study:
Finance
Level:
Basic
Author/Instructor:
Rob Stephens
Publication Date:
March 2022
CPE Credits:
1.5
RS04
NASBA Field of Study:
Finance
Level:
Basic
Author/Instructor:
Rob Stephens
Publication Date:
March 2022
CPE Credits:
1.5
Prerequisites:
None
Advanced Preparation:
None
None
Advanced Preparation:
None
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