variable costs - raw materials, workers wages, energy/fuel for machines. fixed costs- rent, salaries of head office workers, heating and lighting, insurance and interest on loans.
Costs and breakeven

Costs involved

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










Profit = TR TC

TR = price x units sold

TC = FC + VC