From the marginal cost statement, the following equations may be derived:
Contribution = Sales – Variable cost
Contribution = Fixed cost + profit
Fixed cost = Contribution – profit
Fixed cost = Contribution + Loss
Contribution = fixed Cost + Loss
Sales = Variable cost + Contribution
Variable cost = Sales – contribution
Profit = Contribution – fixed cost
Loss = fixed cost – contribution
These equations may be used for solving problems of different types involving cost-volume – profit relationship.
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