Costs and breakeven
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
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
Fixed costs stay the same, no matter how.
Indirect Costs much the business produces
Profit = TR – TC
TR = price x units sold
TC = FC + VC