fixed costs profit margin calculation

[suchona.kani.z]

Passive interests. For example, if you have requested a loan to purchase the property or the equipment, the interest rate represents a fixed cost.
Taxes . Whether you have a production plant or a commercial activity (for example a bar) it makes no difference, you will have to pay government taxes: the IMU, the property tax if you own the property, the tax on the sign, on waste collection, on the occupation of public land and so on.
Whether you have an online or offline business, therefore, you will always have to foresee the fixed cost of government taxes.
Insurance . Whether it’s accident insurance, machinery insurance, or just company car insurance, you’ll need to budget for the insurance premiums you pay each year regardless of production.

Salaries. This is also a fixed cost. Regardless of the volume of production, salaries will always be the same.
Utilities . Electricity, gas and water should be considered exclusively for the use of your company's premises used for administration. In fact, they represent fixed costs only for this area.

As you can see from the graph below, fixed costs are represented by a straight line parallel to the X-axis, relative to the production volume.


Variable costs
Variable costs ( VC), unlike fixed costs, vary according to the volume of goods produced .

If your company produces more t-shirts in a month because there is greater korea email list demand, the energy used, any overtime of the staff, the quantity of raw materials to be used and so on will automatically increase.

So among the variable costs we can include the following items.

Raw materials. A higher volume of products requires a higher volume of raw materials and this immediately brings us to the next point.
Incoming goods costs. For a larger quantity of raw materials, higher shipping and transportation costs are inevitable.
Machinery Maintenance. The use of machinery for a greater number of hours requires more frequent and careful maintenance.
Overtime. If production increases, working hours will be extended and therefore you will need to pay your employees overtime.
Outgoing goods expenses. If the demand for products has increased, it will obviously be necessary to provide for more shipments and transport.
Utilities. Electricity, water and gas in this case should be considered directly proportional to production: machines that remain in operation for a longer time have a higher consumption.
In the graph below you can see even more clearly the difference between fixed costs and variable costs. As you can see, by increasing the quantity of goods produced, the costs also increase. This is the resulting curve.