Home Made

In: Business and Management

Submitted By pumedon
Words 334
Pages 2
Making any decisions in any company/business is very important; it can lead you into a success or a failure. From watching this video, which is about an accounting manager and a company Widget Pros, deciding whether or not this company should continue stay running in business. This video was straight to the point and has taught me a lot of things in a short period of time. First, it have taught me that a short term decision in a company can be made quickly by looking at contribution margin, net loss, relevant costs, fixed cost, and income. Second, I have learned that; to find a contribution margin, you can use the sale revenue and subtract the variable expense, to find a net loss, you can use the contribution margin that you have found from the previous formula and subtract the fixed costs, last but not least, finding an income, you can use the relevant cost and subtract contribution margin. All these formulas were my favorite part; it showed step by step of an easy way to making a short term decision. And also the fixed costs are salary, utilities, depreciation, rent, and admin. But in this case salary is a voidable fixed cost, because after the product was designed, that means the designers’ job is done, therefore the salary is not considered as a fixed cost anymore and the rest such as; utilities, depreciation, rent, and admin, stays the same as unavoidable fixed cost. Lastly, I’ve learn that even if you losing money it doesn’t always mean discontinued the business, just like in this video. The company Widget Pros was losing money but the business stays running until more cost effective product design to take its place, which I thought it was very interesting. At first, as soon as I saw that the income was negative, I automatically assume that this company should be discontinued, the end result definitely surprised me, but from all the explanation from this video,…...

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