Prime Costs and Conversion Costs in Manufacturing

When you talk to manufacturers, they frequently use a term called ‘conversion costs’ and a few of them also use the term ‘Prime Costs’ (especially used by Chinese vendors). A typical manufacturer would look at charging you as below: So, you could guess: Conversion Cost is the total cost that is borne by the manufacturer …

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Margin or Contribution Analysis

Margin Analysis, also referred as Contribution Analysis, is a tabular data to track the prices, variable costs and profit margins for all the members in a value chain (producer, distributor, retailer) for every relevant product within the firm's product line and across competitors. This data is mainly used to understand the below: Which among the …

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Break-even Analysis and Break-even Cannibalization Rate (BECR)

A break-even analysis is a key part of any good business plan. It can also be helpful even before you decide to write a business plan, when you're trying to figure out if an idea is worth pursuing. Long after your company is up and running, it can remain helpful as a way to figure …

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