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Toolkit for Costing a Product

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BREAK EVEN POINT, COST BEHAVIOR & CONTRIBUTION MARGIN

 

The biggest mistake in Costing a Product is not considering and covering all the costs when entering a market.

Assume it’s Summer Time, we are going into the Ice Cream Business!

Toolkit to Cost a Product

 

Variable Cost – A cost that changes depending on the number of goods produced or services provided.

Toolkit to Price a Product

 

 

Fixed Cost – A cost that stays the same no matter how many goods and services are
provided.

Tookkit to Cost a Product

 

Contribution Margin is used to cover fixed cost.

An organization cannot make a profit unless they cover their fixed cost.

Fixed costs are often considered as Overhead Costs.

 
 

Overhead Costs – Business expenses that are not tied directly to generating revenues.

Important Toolkit to Cost a Product

Break Even Point – The point where fixed cost are exactly covered with no gain and no loss.

Toolkit for Costing a product

No Business is opened to make Break Even they are opened to make Profits.

Important Toolkit to Cost a Product


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