Modern entrepreneurs are not so often in theirpractice apply the calculation of indicators of marginal revenue, and in vain, because with their help you can pre-compile a financial forecast of activities. Marginal revenue is the difference between revenue from sales of products and variable costs. Sometimes it is also referred to as the amount of coverage, the part that goes from revenue to recovering fixed costs and making a profit.
For every manager it is very importantcalculate the margin income. The formula is very simple, you need to find the difference between sales volumes multiplied by the sales price and sales volumes multiplied by the cost of direct costs per unit of goods. For greater convenience, you can calculate the indicator per unit of output, you need to find the difference between the sales price and the direct costs of producing a unit of goods.
In large companies for each type of productthe margin income is calculated. This allows you to find out how profitable or unprofitable this or that commodity is. If the indicator is negative, then the output should be suspended, because with each subsequent unit the firm will be increasingly at a loss. Marginal analysis allows you to determine which product is profitable to produce, and which is best removed from production. Using the breakeven model, you can determine, starting with what volume of sales or services performed, the enterprise starts to receive revenue.
To correctly calculate the margin income,it is necessary to determine the direct costs. These include costs tied to a unit of output, such as pay or the cost of materials. Total costs include everything else, they are covered by marginal revenue. If everything is correctly calculated, the total costs will not practically change, because they include the cost of renting a room, the wages of full-time employees, utilities, etc.