Description

Welcome to this course on marginal profitability analysis! You’ll learn how marginal profitability analysis can help you make many business decisions.

We start by defining marginal costs and marginal profit. Once you have those basics down, we can then look at how to calculate marginal profitability. Many of you may be familiar with traditional full-absorption product costing or activity-based costing. We’ll compare them to marginal profitability to show the pros and cons of each method and when each is appropriate.

Finally, we’ll get very practical with some examples of making decisions with marginal profitability analysis. We’ll show you how marginal profitability can help you determine optimal production amounts and which products to promote.

We’ll explain how to use it for setting pricing. We’ll look at how to calculate the change in profitability from a price increase and a price decrease. Marginal profitability analysis is very useful for setting pricing but not the only tool you should use.

Note:This course is also available in Video-based format.