A business has many different costs, from paying for raw
materials through to paying the rent or the heating bill.

By careful classification of these costs a business can analyse
its performance and make better decisions.

The main ways in which a business needs to manage its costs
are as follows:-

Classify costs into fixed and variable, direct and indirect.

Complete Break even analysis this tells a business what it
needs to sell
to cover its costs.

Fixed and Variable Costs:-

Variable costs costs that change with output
Direct costs

Fixed costs stay the same, no matter how.
Indirect Costs much the business produces