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you very much you know how much fun we have over here right and that's why
you're back because we do a big over here right contribution margin example
all right this is right after 68 right before 70 can you believe it can you
believe it let's do this come on contribution margin is sales
minus variable costs number 69 contribution margin example what are we
doing here in 69 what's the example moly company that's what I would just say the
unit's are widgets it's just easier right okay Somali company sells 20,000
units at $12 per unit variable costs are nine dollars per unit six costs or
25,000 now we have three things to determine the contribution margin ratio
the unit contribution margin and income from operations I can look at this thing
superfast and you know honestly figure it all out but we're going to go we're
going to go through it we're going to look through it all step by step by step
we didn't really talk about contribution margin ratio too much because I didn't I
don't really think it's too too important that's just me though what the
contribution margin ratio is and I get to just someone important it
contribution margin sorry for abbreviating but I was short on space
contribution Versailles epic our contribution margin
ratio so what's the contribution let's say how it answers what's the
contribution margin then and what's the sales I'm going to go I'm going to go
we're going to go per unit because I just find that easier and then we can
multiply out so let's just go per unit what's the contribution margin I don't
know what is the contribution margin what is the contribution margin hmm so
what's this margin that I need to contribute to break even or this or that
it's going to be sales minus variable because we're just going to be per unit
Cindi then you can multiply out so sales is $12 per unit what's the variable cost
per unit so let's sort of sum spread out a little bit what's the variable plus 9
12 12 minus 9 sales minus variable contribution margin is $3 per unit
contribution margin over sales is what's the sales 3 that's 3 over 12 3 divided
by 12 is point 25 or 25 percent 25 percent for the first one so let's break
that down a little bit 25 percent of the contribution margin ratio and basically
that's 3 over 12 so you know that that's the profit before the fix 25 percent of
all your incoming chippers is profit right 3 out of every 12 dollars profit
that of the tripperz coming in because every time you sell you and get $12
tripperz coming in right but now 9 are variable costs 3 out of that 12 is going
to be profit before fixed so 3 out of 12 is your contribution margin all right
that's the ratio $3 is a contribution margin but 3 out of the $12 is 25% so if
you have if it was a if the variable costs
where I'll say a lot more higher or say like 11 or 1150 or something that means
your contribution margin per unit would be a lot lower like 1 right and then
1/12 is a lot lower ratio also so if your contribution margin say say your
variable costs were 6 then you would have a profit of $6 on 12 so you have a
50% contribution margin ratio so it'll be big time
all right let's move onward onward enough where people are learning upward
contribution margin ratio yeah now unit contribution margin I mean this is with
you you know come on down so what's the contribution margin it is
sales price minus variable cost because we want to see that profit per unit
because we want to know how many units we got to sell to break-even to make
some money etc etc how many we can do and lose a couple bucks so we can keep
the doors open because we're going to do a big later whoo whoo blue it's three
dollars twelve twelve minus nine per unit per unit sales minus variable so
we're sort of three dollars the unit contribution margin is three dollars per
unit three dollars per unit you know that'll tell us a lot here because every
unit would make three dollars and then it's our fixed costs are twenty-five
thousand dollars right so every unit we've had so we got to come up so every
unit we make three dollars so and then we so we want to we want to sell enough
to cover these twenty five thousand dollars to fixed expenses and make more
things and that's it this is this these numbers stay the same and won't
fluctuate we can figure out what we need to do to get there all right let's find
the third the third of the third cluster number see I it says C here and I say
third I'm eating it ah anyways income from operations what's
the income from operations how we going to figure that hat how do you figure out
income the sales the sales the revenue was
coming in was coming in your business - your cost going out so sales - minus
variable costs - fixed costs sales - costs that's how we're going to get the
income from operations you-you-you
anyway until Arrhenius the income from operations what what we fitted do dahm
dahm will be free ideal entire come on now
trade Oh thought it hurts work could you try to thought back doll jelly's flow is
always messing around always playing age I'm stalling and I can't think of what
I'm doing whoa alright so now let's go let's go for Part C and come from
operations you can only do this two ways really really super fast really fast way
is the income so you're going to say you look every unit every unit you make
three dollars that's your contribution organ right so every unit you sell you
have three dollars of income or three dollars of profit because that's your
sales price minus variable costs so make three dollars per unit you sell 20,000
units right three three dollars times 20,000 units equals sixty thousand
dollars now this is this as your variable costs I broke into it so all
you need is fixed cost now fixed costs of $25,000 so 60 minus $25,000 is thirty
five thousand dollars profit so that is the answer to number see 35,000
oh yeah I'm getting sweating going sweaty sweating
so you can't stop me man you can't stop me and then when I have
an office which with a with air conditioning 24 hours I'm going to laugh
it I'm all laugh about this even though right now I'm thinking you're going to
die dude just make sure 35,000 is correct yes
35,000 is correct I'm looking at my book a is 25% yep
B is $3 yep C is $35,000 I you know I do not want to give misinformation any of
my viewers that is for sure so a longer way to do this if you're not following
how I got the 35,000 from hearing it this is this is how I would do it after
beating the game for like a decade right so let's get ourselves go all right
let's get wild income income from operations let's get all our money
coming in right Mo's our money coming in twelve times twenty thousand twelve
times twenty thousand two hundred 40k two hundred forty thousand two hundred
forty K or anyways yeah two hundred and forty thousand that's the sales minus
variable and the variables twelve twelve soccer variables nine so
now we're going to do nine times twenty thousand to get our B costs nine times
twenty cause nine times twenty thousand equals 180 thousand oh my god starting
to sweat it 180,000 will start I think correctly I'm sorry people it's a
struggle and don't want to hear my trash stir and
no one's to hear this during the day in this office building yeah until what
they did and you know I night I just swings it only recognition up so I feel
like I can't win
$60,000 that's going to be your contribution margin right contribution
margin 60 minus 6 25,000 minus 25,000 and fixed is 35,000 so you know two
different ways to get it anyways I am like so hot I can't think we just got to
see if we can stay positive all right that's all I'm trying to do over here
it's a crazy crazy world I tell you what I watched it I watched the news for like
five minutes the other day I was like what is going on I was like what is
going on so what things having fun with me the dca blur crew like comment share
subscribe keep it positive no don't hate hater fries don't lately
you can hate on me all you want because I don't care because I love it but just
try not to hit on other people if you need someone to you know you need
someone to frickin punch and try to make yourself feel better by talking trash
about I'm your guy because it doesn't faze me one bit I love it but these
other people they're not used to it they don't like it as much as me so be nice
and I hope to like comment share subscribe all that goodness all that
greatness let's go until I see at 70 deuces