When you run a business, variable costs are a system that you must know. The reason is, calculating variable costs correctly will have a big influence on the profits generated.
Basically, any form of business definitely requires costs. These costs include all costs required in the production process until the product is completely finished and ready to be sold on the market.
One thing taken into account is the variable cost. This one thing can also be used as the main basis for analyzing the company's financial aspects.
Variable costs are costs incurred by the company and can change according to the amount of production or sales. The value fluctuates depending on the company's production or sales volume. The higher the increase in production, the more expensive the variable costs, and vice versa.
Apart from that, there are also what are called fixed costs. Fixed costs are costs whose amounts are fixed and do not change even if production increases or decreases.
Variable costs themselves have several types. Check out the following review!
Throughout the production process, there are certain types of costs which are usually included in variable costs, including:
Raw materials are materials purchased to be processed through the production process into final products. For example, in the shoe industry, the raw materials include
leather, canvas, thread, sole, etc.
Direct labor is workers who contribute directly to the production process.
These workers usually receive wages or compensation according to the number of units produced. There are also those who calculate it in terms of the number of hours they spend working at a certain time.
Commission is usually a percentage of the sales proceeds given by the company as additional compensation. The value of the commission depends on sales performance that meets the specified terms and conditions.
Utility here includes the cost of energy used by production tools. This energy supply can be in the form of electricity, gas, water and various other utilities which are used to power the production process.
Packaging or shipping costs still depend on the quantity of the product itself. Therefore it is included in variable costs.
Shipping products from manufacturers to distributors or from distributors to customers is part of these costs. Packaging, transportation, and all costs related to distribution are also included in these costs.
Variable costs for each business may vary depending on the type of business, operational scale, and strategy used. However, in essence variable costs still have the same definition in any business.
Here are some examples of variable costs in a business:
That's the information you need to know about what variable costs are, types and examples in various businesses. It is important to understand that variable cost calculations can provide valuable insight for management in managing operations more efficiently.
Variable costs are just one component that must be understood in setting prices in your business. If you want to learn about the right pricing strategy, take the short program Marketing Pricing Strategy from prasmul-eli.
In this two-day program, the scope of learning includes:
Register yourself via the following link to take this class!
When you run a business, variable costs are a system that you must know. The reason is, calculating variable costs correctly will have a big influence on the profits generated.
Basically, any form of business definitely requires costs. These costs include all costs required in the production process until the product is completely finished and ready to be sold on the market.
One thing taken into account is the variable cost. This one thing can also be used as the main basis for analyzing the company's financial aspects.
Variable costs are costs incurred by the company and can change according to the amount of production or sales. The value fluctuates depending on the company's production or sales volume. The higher the increase in production, the more expensive the variable costs, and vice versa.
Apart from that, there are also what are called fixed costs. Fixed costs are costs whose amounts are fixed and do not change even if production increases or decreases.
Variable costs themselves have several types. Check out the following review!
Throughout the production process, there are certain types of costs which are usually included in variable costs, including:
Raw materials are materials purchased to be processed through the production process into final products. For example, in the shoe industry, the raw materials include
leather, canvas, thread, sole, etc.
Direct labor is workers who contribute directly to the production process.
These workers usually receive wages or compensation according to the number of units produced. There are also those who calculate it in terms of the number of hours they spend working at a certain time.
Commission is usually a percentage of the sales proceeds given by the company as additional compensation. The value of the commission depends on sales performance that meets the specified terms and conditions.
Utility here includes the cost of energy used by production tools. This energy supply can be in the form of electricity, gas, water and various other utilities which are used to power the production process.
Packaging or shipping costs still depend on the quantity of the product itself. Therefore it is included in variable costs.
Shipping products from manufacturers to distributors or from distributors to customers is part of these costs. Packaging, transportation, and all costs related to distribution are also included in these costs.
Variable costs for each business may vary depending on the type of business, operational scale, and strategy used. However, in essence variable costs still have the same definition in any business.
Here are some examples of variable costs in a business:
That's the information you need to know about what variable costs are, types and examples in various businesses. It is important to understand that variable cost calculations can provide valuable insight for management in managing operations more efficiently.
Variable costs are just one component that must be understood in setting prices in your business. If you want to learn about the right pricing strategy, take the short program Marketing Pricing Strategy from prasmul-eli.
In this two-day program, the scope of learning includes:
Register yourself via the following link to take this class!