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Business Costs

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Introduction

Business Costs In a business there are three different types of business costs these costs are: Direct & Indirect Direct costs are expenses that can be attributed making a particular product such costs include factory labour, raw materials and operating machinery. Indirect costs are the general overheads of running a business for example; salaries, telephone bills and rent. Firms that make more than one product will want each one to earn enough sales revenue to cover its direct costs and make a contribution to indirect costs. ...read more.

Middle

They have to be paid even if the firm produces nothing. Variable costs are costs that cab change every time a bill etc... must be paid, these are mostly direct costs such as factory labour, raw material etc...Some costs are semi variable, they only vary slightly because they have a large fixed element, for example workers wages - most people receive a basic salaries and only part of their pay is linked to output. ...read more.

Conclusion

Average & Marginal Average cost is how much each product costs to make. To find the average cost one must divide the total cost by output (number of products made). To make a profit a firm must charge a higher price then this. Marginal cost tells the firm how much cost to make one more product. It's the cost of increasing output by one unit. This helps the firm decided what price to charge for any new orders. I am now going to identify what my business costs are. Fixed Variable Rent � Electricity �200 Wages � Insurance � Rate � ...read more.

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5 star(s)

Response to the question

The author answers the question about costs very well, as he/she sets out a section for each cost and describes each very well. The author improves their response by giving examples, which make it easier for the marker to understand ...

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Response to the question

The author answers the question about costs very well, as he/she sets out a section for each cost and describes each very well. The author improves their response by giving examples, which make it easier for the marker to understand what they are talking about.

Level of analysis

The analysis for this question is minimal as it was only a state and explain question, and there is no room for any analysis to be brought in. The standard of the answer was brilliant, so even if you want to just understand costs I would recommend reading the essay. The author improves the standard of the essay by also including how the cost concepts he/she explained relate to real life with examples and their own business. Examples are very good for business studies essays as they show wider reading and understanding.

Quality of writing

The spelling and grammar were fine. The layout and font were good, as they looked professionally done. This essay has received five stars, for answering the question perfectly.


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