A cost incurred in a constant amount each period regardless of production volume or sales, such as depreciation of equipment and buildings, rent and the salaries of permanent employees.
Japanese name: 固定費
Fixed cost appears in 10 practice questions across 2 topics, including Business Strategy and Accounting Basics, Semiconductor industry and market.
Answer: A. ¥40 million
The variable cost ratio is 20 ÷ 50 = 0.4, so the contribution margin ratio, the part of sales available to cover fixed costs, is 1 − 0.4 = 0.6. Break-even sales are the sales at which the contribution margin exactly covers the fixed costs, so 24 ÷ 0.6 = ¥40 million. The current sales of ¥50 million are above the break-even point, and the profit is 50 − 20 − 24 = ¥6 million.
Answer: A. 25%
The contribution margin ratio is 1 − 0.7 = 0.3, so break-even sales are 45 ÷ 0.3 = ¥150 million. The margin of safety ratio expresses how far current sales exceed the break-even point as a share of sales: (200 − 150) ÷ 200 = 25%. It means the company does not fall into a loss until sales drop by 25%, and the larger it is, the more resistant the company is to falling sales. Break-even sales ÷ sales = 75% is the break-even ratio, and the two add up to 100%.
The variable cost ratio is 20 ÷ 50 = 0.4, so the contribution margin ratio, the part of sales available to cover fixed costs, is 1 − 0.4 = 0.6.
A company has sales of ¥50 million, variable costs of ¥20 m…The contribution margin, sales minus variable costs, must cover both the fixed costs and the target profit.
In a business with fixed costs of ¥30 million and a variabl…To cover the fixed costs of ¥800 million with this margin, 800 million ÷ 1,600 = 500,000 units must be sold, and the sales at that point (the break-even sales) are 500,000 × 4,000 = ¥2 billion.
A semiconductor manufacturer is developing a dedicated chip…In other words, of the contribution margin ratio of 0.6, 0.15 is kept as profit and the remaining 0.45 covers the fixed costs.
A business has fixed costs of ¥27 million and a variable co…Above this, plan B, with its higher contribution margin ratio, increases profit faster and is better; below it, plan A, with its lower fixed costs, is better.
There are two ways to make a product: plan A (fixed costs ¥…As an Amazon Associate I earn from qualifying purchases.
Variable cost Contribution margin Break-even point Depreciation Correlation coefficient Photoresist IDM (integrated device manufacturer) Fabless Foundry ABC analysis