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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 |