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The cost structure
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Formulas, graphs and principles behind the different types of cost structures. Analysis of the break even point.
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9. The cost structurelunedì 11 ottobre 2021 09:29
It's a key dimension of the business model: reflexion of the activities, partners.. That a
organization
It's important to have in mind the economy structure.
THE PROBLEM
Why is it important to make sense about the cost?
Economic dimension: revenue and cost
How can we be sure to be able to cover the economy equation?
--> to cover with the revenues the cost --> economic equilibrium or sustainability
--> to avoid losses
So.. How many goods do you need to produce in order to be profitable?
What price should i set to cover the cost?
How do we do the break-even analyses?
Ex. Suzi has her own driving school… she has the following costs:
• Repayments: 30 'er week
• Insurance: 50 per week
• Advertising: 30 per week
• Wages: 250 per week
• Maintenance: 5 per lesson
• Petrol: 10 per lesson
• Phone bill: 1 per lesson
She charges 25 for 30 min lesson and can do no more than 60 lessons a week
How many lessons a week to reach the break-even?
First try:
Lessons numb: 50
Fixed costs: 360
Variable costs: 16*60=800
Total costs: 1160
Total revenues: 1250
--> revenues > costs
Second try:
Numb: 40
Fixed costs: 360
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