Hello everybody, I heard feedback from a Case Partner that I should name cost drivers faster. So my thinking here is the following: there are fixed and variable cost, and the main drivers for fixed and variable are:
Fixed costs:
Rent / Lease / Property / Production site
Possible depreciation
Administration
Variable costs:
Personnel
Energy/ Water
Unit costs/ material
Now my two questions:
1) Are these the most important cost blocks or have I overlooked something important here? I am interested in an overview of the possible cost sources, which can then be adapted to specific cases.
2) Where would you also assign the terms production costs, operating costs and investment costs to fixed and variable areas?
Thanks a lot!
Hello everybody, I heard feedback from a Case Partner that I should name cost drivers faster. So my thinking here is the following: there are fixed and variable cost, and the main drivers for fixed and variable are:
Fixed costs:
Rent / Lease / Property / Production site
Possible depreciation
Administration
Variable costs:
Personnel
Energy/ Water
Unit costs/ material
Now my two questions:
1) Are these the most important cost blocks or have I overlooked something important here? I am interested in an overview of the possible cost sources, which can then be adapted to specific cases.
2) Where would you also assign the terms production costs, operating costs and investment costs to fixed and variable areas?
Alright, so let's try to bring some order into this. :)
You first have to understand that there are different ways to classify costs. These can then be layered on top of each other using a matrix or similar if this is considered sensible.
At the highest level, there are
Operational costs
Costs of capital (usually interest payments)
Investments
You are mostly talking about Operational Costs. Depending on the criterion used, there are at least 4 possible categories for subdivision:
Contingent on the behavior of costs in the event of fluctuations in production, there are
Fixed Costs
Variable Costs
Depending on the type of production factors consumed, a distinction is made between
Personnel costs
Operating costs
Material costs
According to the functional area in the value chain, there are
Procurement costs
Warehousing/storage costs
Manufacturing costs
Administrative expenses
Direct sales & distribution expenses
Aftersales expenses
Other costs (such as marketing)
Depending on how costs are attributed to the products or services, a distinction can be made between
Direct costs
Overhead
A couple of important points:
Production costs usually cover all costs that can be attributed to the production of produced goods (but interestingly, they are not always direct costs, since material overheads and production overheads can also be included!). This would include the three cost types procurement costs, storage costs and manufacturing costs in the breakdown by functional areas (as mentioned, if directly attributable to the product).
Overhead costs and are usually fixed.
Investments are not operational costs and should therefore be separated from the above consideration
Cheers, Sidi
Alright, so let's try to bring some order into this. :)
You first have to understand that there are different ways to classify costs. These can then be layered on top of each other using a matrix or similar if this is considered sensible.
At the highest level, there are
Operational costs
Costs of capital (usually interest payments)
Investments
You are mostly talking about Operational Costs. Depending on the criterion used, there are at least 4 possible categories for subdivision:
Contingent on the behavior of costs in the event of fluctuations in production, there are
Fixed Costs
Variable Costs
Depending on the type of production factors consumed, a distinction is made between
Personnel costs
Operating costs
Material costs
According to the functional area in the value chain, there are
Procurement costs
Warehousing/storage costs
Manufacturing costs
Administrative expenses
Direct sales & distribution expenses
Aftersales expenses
Other costs (such as marketing)
Depending on how costs are attributed to the products or services, a distinction can be made between
Direct costs
Overhead
A couple of important points:
Production costs usually cover all costs that can be attributed to the production of produced goods (but interestingly, they are not always direct costs, since material overheads and production overheads can also be included!). This would include the three cost types procurement costs, storage costs and manufacturing costs in the breakdown by functional areas (as mentioned, if directly attributable to the product).
Overhead costs and are usually fixed.
Investments are not operational costs and should therefore be separated from the above consideration
Espresso, Whatelse?Espresso Whatelse is an Italian company that produces coffee and espresso machines since 1908. It is the Italian market leader and has a strong presence overall in Europe. In 2019, Espresso Whatelse has increased its revenues but it has seen declining profit margin.
Your client wants to understand the root causes of this 2019 trend and how to increase its profit margin again.
Espresso Whatelse is an Italian company that produces coffee and espresso machines since 1908. It is the Italian market leader and has a strong presence overall in Europe. In 2019, Espresso Whatelse has increased its revenues but it has seen declining profit margin.
Your client wants to understand ... Ganzen Case öffnen
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