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:
- 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
- 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!