MKT100 Formula Review

Variable Costs:
- Costs incurred by producing and/or selling one unit of a product.
- Vary with the company’s production and sales volume.
Fixed Costs:
- Costs that remain constant regardless of production/sales volume.
Capital Costs:
- Benefits apply to more than one year.
Operating Costs:
- Benefits apply to less than (or equal to) one year.

Main Formula:
$Percentage \, Change \, (%) = \frac{New \, Value - Old \, Value}{Old \, Value} \times 100$
Finding the Old Value:
$Old \, Value = New \, Value / (1 + (Percentage \, Change (%)))$
Finding the New Value:
$New \, Value = Old \, Value \times (Percentage \, Change(%) + 1)$

Market Share (in units or revenue):
$Market \, Share (%) = \frac{Firm's \, Sales \, (in \, Revenue \, ($ ) \text{ or } units)}{Total \, Market \, Sales \, (in \, Revenue \, () \text{ or } units)} \times 100
Relative Market Share (in units or revenue):
$Relative \, Market \, Share (%) = \frac{Firm's \, Sales \, (in \,$ \text{ or } units)}{Largest \, Competitor's \, Sales \, (in \, \text{ or } units)} \times 100
Top Three (or Four) Firm Concentration Ratio:
$% \text{ Market Share Competitor 1} + % \text{ Market Share Competitor 2} + % \text{ Market Share Competitor 3} [+ % \text{ Market Share Competitor 4}]$
Herfindahl Index:
Sum \left[ (% \text{ Market Share of each Product or Company})^2 \right]

Margin ($) per unit:
Margin ($) = Price \text{ per unit} - Variable \text{ Costs per unit}
Margin (%):
$Margin (%) = \frac{Margin ($)}{Price} \times 100 \quad \text{ OR } \quad Margin (%) = \frac{Price - Variable \text{ Costs}}{Price} \times 100$
Finding Variable Costs:
$Variable \text{ Costs} = Price \times (1 - Margin(%))$
Finding Price:
Price = \frac{Variable \text{ Costs}}{1 - Margin(%)} \times 100
Gross Profit:
$Gross \text{ Profit} = Total \text{ Revenue} - Total \text{ Variable Costs} \text{ (or Cost of Goods Sold)}$
Net Profit:
$Net \text{ Profit} = Gross \text{ Profit} - Fixed \text{ Costs}$

Markup ($) per unit:
Markup ($) = Price \text{ per unit} - Variable \text{ Costs per unit}
Markup (%):
$Markup (%) = \frac{Markup ($)}{Variable \text{ Costs}} \times 100 \quad \text{ OR } \quad Markup (%) = \frac{Price - Variable \text{ Costs}}{Variable \text{ Costs}} \times 100$

Wholesale to Retail:
- The supply chain is as follows:
- Manufacturer → Wholesaler → Retailer → End-User.
- Supplier's Selling Price:
  $Supplier's Selling Price = Customer's Variable Costs$
- Customer's Selling Price:
  Customer's Selling Price = Supplier's Selling Price + Customer's Margin($)
- Alternate Ways of Finding Price:
- Based on
  - Margin(%) formula:
    Price = \frac{Variable \text{ Costs}}{1 - Margin(%)} \times 100
  - Markup(%) formula:
    $Price = Variable \text{ Costs} \times (1 + Markup(%))$
  - Margin($) formula:
    Price = Margin($) + Variable \text{ Costs}
  - Markup($) formula:
    Price = Markup($) + Variable \text{ Costs}

Break-Even Units:
Break-Even \text{ Units} = \frac{Fixed \text{ Operating Costs} ()}{Margin()}
Break-Even Revenue:
$Break-Even \text{ Revenue} = Price \text{ per Unit} \times Break-Even \text{ Units}$
- Alternate way of finding Break-Even Revenue:
  Break-Even \text{ Revenue} = \frac{Fixed \text{ Operating Costs} ($)}{Margin(%) }

ROMI (%):
$ROMI(%) = \frac{[Incremental Revenue($ ) \times Margin(%)] - Marketing \text{ Spending} ()}{Marketing \text{ Spending} ($)} \times 100
Incremental Revenue:
Incremental Revenue($) = Total \text{ Revenue after Campaign} - Revenue \text{ before Campaign}
- Alternate way of finding Incremental Revenue:
  $Incremental Revenue($ ) = [1 + ROMI(%)] \times Marketing \text{ Spending} ($$) \times Margin(%)