Hello everyone,

I was wondering which certain ocst structure you are using for profitabilty cases?

The way I used to split costs was:

Variable costs(= costs per unit): Material, labour per hour (wages), manufacturing costs (electricity, R&D, delivery)

Fixed costs: Rent, Investment costs (Capex), Depreciation, Taxes, Utilities, personnel (salaries)

I faced an issue when I was trying to solve the case of Innogy Consulting ("Smart Meters") and segmented costs for fixed and variable costs for Innogy Consulting here on this forum: In the Innogy case, cost structure is splitted in:

• Capex
  • Cost per power Smart Meter
  • Cost per gas Smart Meter
  • Cost for IT infrastructure per household/commercial property
  • Cost for telecoms infrastructure per household/commercial property
  • Installation cost: assumed 10% of overall Capex
• Opex
  • Smart Meter maintenance costs per month and meter
  • IT maintenance costs p.a. of IT related Capex
  • Telecoms maintenance costs per month and household/commercial property

Here CAPEX is clearly a variable cost structure for me as it depends on the units produced same as OPEX costs, however in my previous strutcre i defined CAPEX as something occuring once initially (e.g. purchase of plant, upgrading of machine etc.).

For further information I did research on the Internet however I found out the following components for CAPEX and OPEX:

i) CAPEX = Investment costs (new machine, extention, technical upgrade)

II) Operating cost = COGS (cost for raw materials, labor costs, storing costs, units sold) + Operating expenses (taxes, depreciation, rent, R&D, advertisement, maintenance)

Hence, I am confused what would be the best approach for segmenting costs and would like to ask for your advice.

Thanks a lot in advance!

Best