Unit 5 Flashcards
Factors that determine the profitability of a product
Product price
Unit volume sold
Cost (fixed and variable)
Profitability
Variable cost
A corporate expense that changes in proportion to how much a company produces or sells
Ex. raw materials, labor, utilities, commission or distribution costs
Fixed costs
A business expense that doesn’t change even with an increase or decrease in the number of goods and services produced or sold
Breakeven analysis
The process of calculating the number of units of a good or service a company must sell to cover all of its cost
The point in where the selling of a g/s starts to make profit
Outsourcing
Hiring a party outside a company to perform services or create goods that were traditionally performed in-house by the company’s own employees and staff
Offshoring
Hiring another company, which is also in another country, to do a job that was previously done by employees of my own company
Reshoring/inshoring/backshoring
Returning to the country of origin, all or some of the activities that the company had outsourced abroad
Insourcing or inhouse strategy
Internally carrying out activities that were previously outsourced
Variance analysis
The process of weighing risk against expected return (expressed as variance)
