What is ratio of fixed cost in SAP CO-PA - Profitability Analysis?

SAP Term: ratio of fixed cost

• Component: CO-PA

• Component Name: Profitability Analysis

• Description: Is the ratio of fixed cost as part of total cost. Example: When you produce 1 bicycle, you need 1 set of tires. To produce 100 bikes, you need 100 sets of tires, but rent and interest don't change. In the latter case, the variable cost = price of the tires increases but the fixed cost = rent or interest stays the same. Therefore, the fixed cost ratio decreases.

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• Key Concepts: 
  The ratio of fixed cost is a measure of the proportion of fixed costs to total costs in a given period. It is used in SAP's CO-PA Profitability Analysis to determine the profitability of a company's operations. This ratio is calculated by dividing the total fixed costs by the total costs for a given period. 
  
  How to use it: 
  The ratio of fixed cost can be used to identify areas where cost savings can be made. It can also be used to compare the profitability of different operations or products within a company. In SAP's CO-PA Profitability Analysis, the ratio of fixed cost is used to calculate the profitability of a company's operations. 
  
  Tips & Tricks: 
  When calculating the ratio of fixed cost, it is important to ensure that all costs are included in the calculation. This includes both direct and indirect costs, such as overhead and administrative expenses. Additionally, it is important to ensure that all costs are allocated correctly in order to get an accurate result. 
  
  Related Information: 
  The ratio of fixed cost is closely related to other measures of profitability, such as return on investment (ROI) and gross margin. Additionally, it can be used in conjunction with other measures, such as cost-volume-profit analysis, to gain a better understanding of a company's profitability.