![]() ![]() Typical variable costs for small businesses are the cost of various materials that go into the making of the goods, as well as office supplies, hourly wages, and other operating expenses. Together, these two types of costs can tell us the total cost of the product or service. For example, fixed costs such as a mortgage or rent remain the same for the entire term of the loan or lease. Variable costs are completely different than fixed costs, which tend to remain the same regardless of whether a business is providing services or not or manufacturing any goods at the moment. ![]() The main feature of variable costs is their disappearance when the business stops operating. Likewise, if more employees work in the office, variable electricity and other expenses may increase. For example, an increase in vehicle use results in a corresponding increase in variable fuel and vehicle maintenance costs. These costs vary based on the use of the products or services, and they can vary based on any number of factors. Variable cost is a cost that can change over time. cost is the monetary value of the resources used. ![]() Costs are measured in monetary terms, i.e. What is it and what is their economic and practical meaning for business owners and management?Ĭosts are the sum of resources used in the activities of the business for a certain period of time. When doing project calculations, management is faced with the concept of fixed and variable costs. Businesses need a plan not only to understand the goals and ways to achieve them but also to substantiate the profitability and the possibility of implementing investment projects. ![]()
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