Cost data

- [Instructor] Studying your cost data might be slightly unpleasant at times, but this analysis can be crucial in solving your business problems. Understanding where your costs are coming from can help you set the appropriate goals. For example, you may have to sell a certain volume of products just to break even. Knowing this number can help you set the appropriate sales goals. The two types of costs are fixed and variable. With fixed costs, your costs stay constant, regardless of how high or low your sales volumes. An example of these are rent, insurance, or payroll. With variable costs, these scale with sales volume. A good example of these are raw material, shipping costs, and packaging costs. A great example of a variable cost is raw materials, so let's break this down with an example. Let's say a company sells T-shirts. If one month they have 10 orders and the following month they have 100 orders, then the cost of…