limit values may seem something of a purely theoretical and unrelated to the actual conduct of affairs in the company only because of the lack of practice working with them during the Soviet and the adjustment period.In fact, the limit values - is the most effective way to keep track of potential opportunities to increase profits, to aspire to all companies without exception.With regard to their logic and calculation, it is nothing more complicated than elementary algebra.
Marginal revenue - an additional income that the company receives from the sale of an additional unit of product.He is one of the main limiting variables having a direct relationship with profit and cost - the two most important indicators of the company.Marginal revenue is the amount of which has a different meaning depending on the volume of sales.Thus, for analysis using marginal revenue is necessary to draw up a table showing the change in this value with the change in sales.
to make it clear, we define the marginal revenue.The income limit is called the change in total revenue as a result of higher sales volumes per standard unit.For example, your company sold 20 units of 10 rubles each.Then sales have increased by one, but the price remains the same.In this case, the income limit is equal to 20 rubles.
may seem that at a fixed price, marginal revenue is always equal to the value of the price itself, but because it makes no sense to carry out the subsequent calculation of this indicator.However, it is not.It is known that with an increase in sales volumes, the company is forced to reduce the price in order to attract those buyers who at this price will not buy goods.It turns out that you gain from increased volumes, but losing on the fact that all products are a bit cheaper.In order to determine that outweighs - winning or losing - and used the income limit, also known as the marginal revenue.
Here is an example: as a result of higher sales volumes from twenty to twenty-one units of a unit of production, the price per unit has decreased to 9 rubles and 50 kopecks.In this case, our new combined income will be equal to 199.5 rubles, which is 50 cents lower than the income under the old scale.It turns out that the income limit is -50 cents.As it turned out, to increase sales for the company is not profitable.
This example shows the use of limit values in management.If limits revenues fall below zero, so the company needs to stop the extensive growth and restrain the growth in production to keep prices at a reasonable level.Until then, until the marginal revenue is positive, there is the prospect for increasing the volume.
However, this analysis is somewhat incomplete.If the marginal revenue is positive, we need to analyze the marginal cost of the enterprise.Marginal costs show how costs have changed as a result of higher sales volumes.According to elementary logic, this value will be positive, as each new unit of production requires the cost of its production.On the other hand, the more units of goods produced, the lower the fixed costs per unit of production until such time as the production capacity is not fully loaded.
In any case, if the income limit greater than the marginal cost, then we get a marginal profit, which means that we need to increase sales.Typically, this happens as long as the required new equipment for the production of any active sales will not lower prices in the market.
