COST STRUCTURE<\/strong><\/p>\n
[\/et_pb_text][et_pb_text _builder_version=”4.9.2″ _module_preset=”default” text_font=”Montserrat||||||||” text_text_color=”#e8e8e8″ text_font_size=”2.2em” text_line_height=”1.6em” header_font=”Montserrat||||||||” background_color=”RGBA(0,0,0,0)” use_background_color_gradient=”on” background_color_gradient_start=”rgba(0,0,0,0.59)” background_color_gradient_end=”rgba(0,0,0,0.8)” custom_margin=”||||false|false” custom_padding=”1em|1em|1em|1em|true|true” animation_style=”zoom” animation_duration=”600ms” animation_intensity_zoom=”72%” border_radii=”on|15px|15px|15px|15px” locked=”off” global_colors_info=”{}”]LEARN<\/strong>[\/et_pb_text][\/et_pb_column][et_pb_column type=”1_2″ _builder_version=”4.9.2″ _module_preset=”default” global_colors_info=”{}”][et_pb_text _builder_version=”4.9.2″ _module_preset=”default” text_font=”Montserrat||||||||” text_font_size=”1.2em” text_line_height=”1.4em” background_color=”RGBA(0,0,0,0)” use_background_color_gradient=”on” background_color_gradient_start=”rgba(0,0,0,0.58)” background_color_gradient_end=”rgba(0,0,0,0.64)” custom_padding=”1em|2em|1em|2em|true|true” animation_style=”slide” animation_direction=”right” animation_duration=”750ms” animation_delay=”400ms” border_radii=”on|15px|15px|15px|15px” global_colors_info=”{}”]<\/p>\n The purpose of the Cost Structure Module is to support managers to identify the two main categories of cost and to calculate total costs.<\/span><\/p>\n [\/et_pb_text][\/et_pb_column][\/et_pb_row][\/et_pb_section][et_pb_section fb_built=”1″ _builder_version=”4.9.2″ _module_preset=”default” background_color=”RGBA(0,0,0,0)” custom_margin=”0px|0px|0px|0px|true|true” custom_padding=”1em|0px|1em|0px|false|true” global_colors_info=”{}”][et_pb_row column_structure=”1_3,1_3,1_3″ use_custom_gutter=”on” gutter_width=”4″ _builder_version=”4.9.2″ _module_preset=”default” module_alignment=”center” custom_margin=”||||false|false” locked=”off” global_colors_info=”{}”][et_pb_column type=”1_3″ _builder_version=”4.9.2″ _module_preset=”default” global_colors_info=”{}”][et_pb_blurb image=”https:\/\/probm2.cti.ugal.ro\/site\/wp-content\/uploads\/2021\/07\/pexels-startup-stock-photos-7374-300×200.jpg” image_icon_width=”150px” _builder_version=”4.13.0″ _module_preset=”default” header_level=”h2″ header_font=”Montserrat|600|||||||” header_text_align=”center” header_font_size=”18px” body_font=”Montserrat||||||||” background_color=”#fcc01b” text_orientation=”center” width=”69%” module_alignment=”center” custom_padding=”19px||||false|false” animation_style=”zoom” animation_direction=”left” animation_duration=”750ms” animation=”off” link_option_url=”#link1″ border_radii=”on|10px|10px|10px|10px” border_width_all=”1px” border_color_all=”#969696″ border_radii_image=”on|14px|14px|14px|14px” box_shadow_style=”preset3″ box_shadow_style_image=”preset1″ image_max_width=”150px” locked=”off” global_colors_info=”{}” transform_styles__hover_enabled=”on|hover” transform_scale__hover=”107%|107%” transform_scale__hover_enabled=”on|hover” transform_translate__hover_enabled=”on|desktop” transform_rotate__hover_enabled=”on|desktop” transform_skew__hover_enabled=”on|desktop” transform_origin__hover_enabled=”on|desktop”]<\/p>\n [\/et_pb_blurb][\/et_pb_column][et_pb_column type=”1_3″ _builder_version=”4.9.2″ _module_preset=”default” global_colors_info=”{}”][et_pb_blurb image=”https:\/\/probm2.cti.ugal.ro\/site\/wp-content\/uploads\/2021\/07\/teaching-300×198.jpg” image_icon_width=”150px” _builder_version=”4.14.7″ _dynamic_attributes=”link_option_url” _module_preset=”default” header_level=”h2″ header_font=”Montserrat|600|||||||” header_text_align=”center” header_font_size=”18px” body_font=”Montserrat||||||||” background_color=”#fcc01b” text_orientation=”center” width=”69%” module_alignment=”center” custom_padding=”19px||||false|false” animation_style=”zoom” animation_duration=”750ms” animation=”off” link_option_url=”@ET-DC@eyJkeW5hbWljIjp0cnVlLCJjb250ZW50IjoicG9zdF9saW5rX3VybF9wYWdlIiwic2V0dGluZ3MiOnsicG9zdF9pZCI6Ijg3NTcifX0=@” border_radii=”on|10px|10px|10px|10px” border_width_all=”1px” border_color_all=”#969696″ border_radii_image=”on|14px|14px|14px|14px” box_shadow_style=”preset3″ box_shadow_style_image=”preset1″ image_max_width=”150px” locked=”off” global_colors_info=”{}” transform_styles__hover_enabled=”on|hover” transform_scale__hover=”107%|107%” transform_scale__hover_enabled=”on|hover” transform_translate__hover_enabled=”on|desktop” transform_rotate__hover_enabled=”on|desktop” transform_skew__hover_enabled=”on|desktop” transform_origin__hover_enabled=”on|desktop”]<\/p>\n [\/et_pb_blurb][\/et_pb_column][et_pb_column type=”1_3″ _builder_version=”4.9.2″ _module_preset=”default” global_colors_info=”{}”][et_pb_blurb image=”https:\/\/probm2.cti.ugal.ro\/site\/wp-content\/uploads\/2021\/07\/pexels-jessica-lewis-4022332-300×200.jpg” image_icon_width=”150px” _builder_version=”4.14.7″ _dynamic_attributes=”link_option_url” _module_preset=”default” header_level=”h2″ header_font=”Montserrat|600|||||||” header_text_align=”center” header_font_size=”18px” body_font=”Montserrat||||||||” background_color=”#fcc01b” text_orientation=”center” width=”69%” module_alignment=”center” custom_padding=”19px||||false|false” animation_style=”zoom” animation_direction=”right” animation_duration=”750ms” animation=”off” link_option_url=”@ET-DC@eyJkeW5hbWljIjp0cnVlLCJjb250ZW50IjoicG9zdF9saW5rX3VybF9wYWdlIiwic2V0dGluZ3MiOnsicG9zdF9pZCI6Ijg3ODgifX0=@” border_radii=”on|10px|10px|10px|10px” border_width_all=”1px” border_color_all=”#969696″ border_radii_image=”on|14px|14px|14px|14px” box_shadow_style=”preset3″ box_shadow_style_image=”preset1″ image_max_width=”150px” locked=”off” global_colors_info=”{}” transform_styles__hover_enabled=”on|hover” transform_scale__hover=”107%|107%” transform_scale__hover_enabled=”on|hover” transform_translate__hover_enabled=”on|desktop” transform_rotate__hover_enabled=”on|desktop” transform_skew__hover_enabled=”on|desktop” transform_origin__hover_enabled=”on|desktop”]<\/p>\n [\/et_pb_blurb][\/et_pb_column][\/et_pb_row][\/et_pb_section][et_pb_section fb_built=”1″ _builder_version=”4.9.2″ _module_preset=”default” background_color=”RGBA(0,0,0,0)” custom_padding=”1em||1em||true|false” locked=”off” global_colors_info=”{}”][et_pb_row column_structure=”2_3,1_3″ _builder_version=”4.9.2″ _module_preset=”default” custom_padding=”||||false|false” global_colors_info=”{}”][et_pb_column type=”2_3″ _builder_version=”4.9.2″ _module_preset=”default” global_colors_info=”{}”][et_pb_text _builder_version=”4.9.2″ _module_preset=”default” animation_style=”slide” animation_direction=”bottom” animation_duration=”700ms” global_colors_info=”{}”]<\/p>\n [\/et_pb_text][\/et_pb_column][et_pb_column type=”1_3″ _builder_version=”4.9.2″ _module_preset=”default” global_colors_info=”{}”][et_pb_text module_class=”download-button” _builder_version=”4.9.2″ _module_preset=”default” text_font=”Montserrat||||||||” text_font_size=”1em” text_orientation=”right” animation_style=”fade” animation_delay=”1500ms” link_option_url_new_window=”on” locked=”off” global_colors_info=”{}”]<\/p>\n [\/et_pb_text][\/et_pb_column][\/et_pb_row][et_pb_row _builder_version=”4.9.2″ _module_preset=”default” background_color=”#FFFFFF” custom_padding=”27px|2em||2em|false|true” animation_style=”zoom” border_radii=”on|5px|5px|5px|5px” border_width_all=”1px” border_color_all=”#c4c4c4″ box_shadow_style=”preset1″ global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.9.2″ _module_preset=”default” global_colors_info=”{}”][et_pb_text _builder_version=”4.14.7″ _module_preset=”default” custom_margin=”|0px||0px|false|true” hover_enabled=”0″ global_colors_info=”{}” sticky_enabled=”0″]<\/p>\n The Cost Structure is one of the most important indicators characterising the costs in the organisation. The cost structure includes all<\/b> costs and expenses <\/b>that the company will incur when introducing a business model.<\/p>\n The purpose of the Cost Structure Module is to support managers to identify the two main categories of cost and to calculate total costs.<\/p>\n After the completion of this module the learner will be able to:<\/p>\n There are two main categories of the cost structure:<\/p>\n Source: https:\/\/diffzi.com\/fixed-cost-vs-variable-cost\/<\/a><\/p>\n Together, they represent the total costs (TC) incurred by the enterprise. Hence, variable costs include all types of costs in the enterprise that are not included in the fixed costs.<\/p>\n Information on variable and fixed costs is used for short-term decision making and variable cost accounting.<\/p>\n Fixed costs remain the same over a long period of time, but this does not mean that their value is always the same. The costs depend on macroeconomic conditions and therefore the costs are subject to change, but not due to the level of activity.<\/p>\n Source: https:\/\/commons.wikimedia.org\/wiki\/File:CVP-TC-FC-VC.svg<\/a><\/td>\n Fixed costs can be divided into:<\/p>\n Source: https:\/\/commons.wikimedia.org\/wiki\/File:CVP-TC-FC-VC-Sales-Contrib-VC-PL-compat.svg<\/a><\/td>\n In distinguishing whether the cost is fixed or variable, consideration should be given not to the period of time, but to whether the cost is affected by the production volume.<\/p>\n When dividing the fixed costs by the production volume, we get the average fixed cost:<\/p>\n AFC – average fixed cost<\/p>\n FC- fixed cost<\/p>\n Q – production volume<\/p>\n The variable costs include, among others:<\/p>\n With little production, variable costs soar. However, when increasing production, these costs stabilize and increase slightly along with a further increase in production (introduction of production specialisation). \u00a0 <\/b><\/td>\n Variable costs are included in profit forecasts and when calculating the break-even point (BEP) for a company or project (methods for calculating the costs are presented in the Financial part<\/b>).<\/p>\n \u00a0 <\/b><\/td>\n Currently, in the era of a pandemic and financial crisis, changes in customer behaviour, increasing price competition and more and more difficulties in obtaining financing for operations, control and optimisation of the cost structure are of particular importance<\/b>.<\/p>\n The following should be done:<\/p>\n <\/p>\n Entrepreneur ABC wants to produce cups, and has a fixed cost of $10,000 per month. If the company does not make any cups, it would still have to pay $10,000 to rent the machine. If it produces a million cups, its fixed cost is still the same. Variable costs go up to $ 2 million.<\/p>\n Response: <\/i>The more fixed costs a company has, the more profit it must make in order to be able to break even, so it has to work to produce and promote its own products. This is because these costs change and occur.<\/p>\n <\/p>\nCost structure<\/h2>\n
![\"\"](\"https:\/\/probm2.cti.ugal.ro\/site\/wp-content\/uploads\/2021\/04\/pdf-icon2-1.png\")
<\/a><\/div>\nIntroduction<\/h2>\n
Purpose<\/h3>\n
Learning Outcomes<\/h3>\n
\n
\n
Keywords<\/h3>\n
\n
\n
\n
<\/ul>\n<\/li>\n<\/ul>\n
Theoretical background<\/h2>\n
![](\"https:\/\/probm2.cti.ugal.ro\/site\/wp-content\/uploads\/2021\/12\/EN\/bmc-8.png\")
<\/p>\n<\/ul>\n
Categories of cost structure<\/h3>\n
\n
\n
Costs in the company \u2013 division<\/h3>\n
![\"\"](\"https:\/\/probm2.cti.ugal.ro\/site\/wp-content\/uploads\/2021\/11\/m10-1.jpg\")
<\/p>\n\n\n
\n ![\"\"](\"https:\/\/probm2.cti.ugal.ro\/site\/wp-content\/uploads\/2021\/11\/m10-2.jpg\")
<\/td>\n![\"\"](\"https:\/\/probm2.cti.ugal.ro\/site\/wp-content\/uploads\/2021\/11\/m10-3.jpg\")
<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\nFixed costs \u2013 definition<\/h3>\n
\n\n
\n Fixed costs do not change with a change in production volume. <\/b>This means that reducing production does not change fixed costs.<\/p>\n ![\"\"](\"https:\/\/probm2.cti.ugal.ro\/site\/wp-content\/uploads\/2021\/11\/CVP-TC-FC-VC.svg.png\")
<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\nFixed costs \u2013 types<\/h3>\n
\n
\n
\n\n
\n The examples<\/b> of fixed costs can be the following:<\/p>\n \n
\n
![\"\"](\"https:\/\/probm2.cti.ugal.ro\/site\/wp-content\/uploads\/2021\/11\/CVP-TC-FC-VC-Sales-Contrib-VC-PL-compat.svg.png\")
<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\nFixed costs \u2013 basic rule<\/h3>\n
![\"\"](\"https:\/\/probm2.cti.ugal.ro\/site\/wp-content\/uploads\/2021\/11\/m10-5.jpg\")
<\/p>\nFixed costs \u2013 formula<\/h3>\n
\u00a0 AFV= FC\/Q<\/b><\/h4>\n
\n\n
\n <\/p>\n \n
\n
![\"\"](\"https:\/\/probm2.cti.ugal.ro\/site\/wp-content\/uploads\/2021\/11\/m10-6.jpg\")
<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n\n\n
\n By changing as the volume of activity changes, variable costs may respond to these changes in different ways. Due to the nature of the reaction, variable costs are divided into:<\/p>\n \n
\n
![\"\"](\"https:\/\/probm2.cti.ugal.ro\/site\/wp-content\/uploads\/2021\/11\/m10-7.jpg\")
<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\nCost Optimisation – Changing Fixed Costs into Variable Costs<\/h3>\n
\n
\n
Examples and Good practice<\/h2>\n
<\/h3>\n
Fixed costs \u2013 example<\/h3>\n
<\/h2>\n
References and External Links<\/h2>\n