SLC | S21W6 | Costs for entrepreneurs - Cost structure
Assalamu Alaikum Wa Rahmatullah, I hope everyone is well, I am also well by the grace of Alhamdulillah. I will now write a few words related to the topic of this contest. As much as I have an idea about the subject, I will try to give the maximum. I hope everyone will like this post and my expression. So let's get started without delay.
What is a cost structure, and what is its importance for entrepreneurship?
Cost structure is an important aspect of business, the good and bad of the business depends on a perfect cost structure. Cost structure is basically a foundation of business, it manages all the necessary expenses of the business.
The cost structure is basically of two types:-
1. | Fixed costs |
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2. | variable costs |
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Fixed costs are those expenses that are fixed. Such as shop rental, cost of various equipment, etc.
Variable costs are those costs that are not fixed, can change over time, such as raw materials.
Cost structure plays an important role in business, such as:- |
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- It helps in pricing.
- It can determine how profitable a product is.
- You can plan your business in the future.
- Business losses can be reduced.
Provide examples of businesses that use the cost structure methods explained; explain your answers
The cost structure method is basically a matter where businesses divide each of their expenses into separate sectors. In this, they can easily master the cost structure and dividends of the business.
Some examples of businesses where the cost structure method is used are given below:- |
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Rides like, send them.
Here is their permanent cost, apps and server costs.
Variable costs are driver costs and promotional costs.E-commerce such as Daraz.
Here are their fixed costs, office rent, system maintenance.
Being variable costs, delivery, packaging costs.Productive businesses, such as. Mobile manufacturing company.
Here is their fixed cost, the maintenance cost of the factory, and the machine.
Variable costs are labor costs.
What are the elements of a cost structure? Provide examples
The components of a cost structure are, |
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Fixed Costs:- Will remain fixed at certain times.
- Shop or office rental.
- Internet,
- apps,
- website maintenance costs.
Variable Cost:- Will change over time.
- Workers' remuneration.
- Raw materials.
Semi-variable costs:-
- Sometimes permanent,
- sometimes variable.
- Electricity bills, etc.
Such as:-
The cost structure of a fast food store. |
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Fixed Cost:-
- Shop Rent 15000.
- Maintenance 5000.
Variable Costs :-
- Raw Material 25,000
- Workers' remuneration 12,000
Semi-variable costs:-
- Electricity bill is 7000 taka.
In this way, businesses manage their business by adopting a cost structure method.
Prepare the cost structure of a business dedicated to making cakes. It has a production of 5 cakes per day and expects to obtain a total profit margin of 25%.
Suppose a business is being run with 5 cakes 25% profit every day, here the cost structure and profit calculations of the business are mentioned step by step: –
First fixed costs, then variable costs and semi-variable costs are mentioned step by step.
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Very nicely explained. The cost analysis of the cake making business in particular is remarkable. It can be a guide for many. Best of luck to this contest.
Thank you so much dear...
I agree with you that the cost structure is the basic foundation of a business. You have detailed this cost structure issue very well.
You have also provided some examples of fixed costs as well as variable costs. Thank you very much for the detailed explanation.
Good luck my friend...
Greetings @memamun
1.- You have presented the concept and importance of the cost structure for a business, highlighting that it can affect the management of a company in a good or bad way, everything depends on the cost information that is recorded.
2.- You have shared acceptable examples of businesses that fit the cost structure methods, taking into account the production system of each of the companies.
3.- You have commented on the elements of the cost structure, and basic examples in an acceptable manner, each of them showing the expenses by area in which the company incurs.
4.- You have developed the proposed exercise in an acceptable manner, leaving the sale price that each cake should have.
Thanks for joining the contest