What factors should I consider in a cost analysis?

What factors should I consider in a cost analysis?

When conducting a cost analysis, consider factors like direct costs, indirect costs, fixed and variable costs, and opportunity costs.

Can you explain direct and indirect costs?

Direct costs are expenses that can be directly attributed to a specific project, like materials. Indirect costs are overheads, like utilities, that support multiple projects.

How do fixed and variable costs differ?

Fixed costs remain constant regardless of production levels, while variable costs fluctuate with production volume.

What is opportunity cost?

Opportunity cost is the potential benefit lost when choosing one alternative over another.

Can you give me an example of opportunity cost?

Sure! If you spend time studying for an exam instead of working a part-time job, the opportunity cost is the wages you could have earned.