playvideopokerrealmoney| What is the impact of variable costs on corporate profits?

Variable cost is directly affected by the production capacity of the enterprise.PlayvideopokerrealmoneyThe cost, such as raw materials, labor, etc. In the process of enterprise operation, variable cost directly affects the profit of the enterprise. therefore, it is very important to understand the impact of variable cost on enterprise profit.

I. the direct impact of variable costs on enterprise profits

The profit of an enterprise is usually determined by both revenue and cost. In the case of fixed income, the lower the cost, the higher the profit. Variable cost reduction means that the cost of each unit of product in the production process is also reduced, thus improving the profits of the enterprise. For example, if a company that produces electronic products can reduce the cost of raw materials through technological innovation, the cost of each product will be reduced and its profits will increase accordingly.

Second, the indirect influence of variable cost on enterprise profit.

In addition to directly affecting profits, variable costs will also indirectly affect the market competitiveness and profit model of enterprises. Reducing variable costs will help enterprises to reduce sales and increase market share, thus increasing revenue. In addition, reducing variable costs can also improve the profit model of enterprises and make enterprises remain competitive in the fierce market competition.

Third, how to improve enterprise profits by reducing variable costs

onePlayvideopokerrealmoney. Technological innovation: reduce the cost of raw materials or improve production efficiency through technological innovation, so as to reduce variable costs.

two。 Economies of scale: through the expansion of production scale, to achieve economies of scale, thereby reducing the cost of per unit product.

3. Supply chain management: optimize supply chain management, reduce raw material waste and reduce inventory cost.

4. Labor cost control: reduce the labor cost per unit product by improving labor production efficiency.

IV. Case study

Take an automobile manufacturing enterprise as an example, assuming that the variable cost of each car is 100000 yuan and the sales price is 200000 yuan, if the variable cost is reduced to 80, 000 yuan through technological innovation, then the profit per car will increase from 100000 yuan to 120000 yuan.

As can be seen from the above table, the profit of each car has increased by 20,000 yuan by reducing variable costs.

V. Summary

To sum up, variable cost has a direct and indirect impact on enterprise profits. Enterprises can reduce variable costs and improve profits through technological innovation, economies of scale, supply chain management and other ways. However, reducing variable costs does not mean blindly pursuing low costs. Enterprises also need to balance the relationship between cost and product quality to ensure that the quality of products is not reduced while reducing costs.