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Costs
A cost refers to the expenditure a business incurs while producing goods or services. Typical costs include payments for raw materials, wages, rent, and fuel.
Direct Costs
Expenses that can be directly linked to the production of a specific product or service, such as raw materials and labour costs.
Economies of scale
Economies of scale occur when a business's average cost per unit decreases as its production scale increases.
Fixed costs
Fixed costs remain constant, regardless of production levels.
Indirect Costs
Expenses that are not directly tied to the production of a specific product but are necessary for the overall operation, such as utilities, office supplies, and administrative expenses.
Running Costs
The ongoing expenses required to operate a business, including salaries, rent, utilities, and maintenance.
Set Up Costs
The initial expenses incurred when starting a business, such as purchasing equipment, legal fees, and branding costs.
Total Costs
The sum of all expenses incurred in producing a good or service.
Variable costs
Variable costs change in proportion to the level of output.