What is the cost structure?
Cost structures are simply identifying how the costs associated with the production of goods or services are distributed throughout the process. While some consider this structure referring only to the finances used in the production process, the actual also takes into account the use of all types of resources. This may include costs such as work and public services, as well as termination costs such as sales and marketing costs.
When trying to create a reasonable image of the cost structure associated with the production of any type of goods or services, it is the first step to understand each individual step that occurs. This begins with the development of the idea of product, obtaining raw materials and creating production devices that are used to create the final product. At the same time, this structure will solve all work costs associated with each step. This will include not only wages and Salaries cost, but also auxiliary benefits offered to employees such as holidays, retirementand benefits for health. In principle, the cost structure will include any costs incurred to ensure that all necessary components for production are introduced.
, however, the effective cost structure does not end when good or service is formed. There are still storage, marketing and sales and product transfer matters for consumers. This means that the structure must also include storage costs, while the product is waiting for sale, all the costs associated with the marketing and the sale of the product and the cost of transport and transactions that arise when the product is delivered to the buyer.
Analysis of all these factors in determining the current cost structure brings two important benefits for manufacturers. First, the current cost of cost structure helps to determine the unit price for each product produced. Obviously, the unit costs must exceed the SCTent costs of product production or company will soon be out of business. Secondly, evaluation of expenditure that forms the structure of costs can often help identify points along a process that can be improved for greater efficiency, or at least more responsible use of resources at hand. This aspect can also affect the final unit costs and may help increase the profit range to each unit produced.