© 2011 Sixhills Consulting LtdUnderstanding costs and how they behave helps when forecasting for a budget1. Fixed vs. VariableUnderstanding Cost Behaviour2. What Can Affect Costs• Internal– Business influences – products, volumes, production methods, pricing, stock– Functions – marketing, operations, Technology, purchasing, distribution, HR– People and business objectives– Available resources• External– Economy– Population– Community/social trends– Labour force– Legislation and regulation– Politics and government– Customers– Competition– SuppliersTime period of estimations is important – “all costs are variable in the long term”‘Fixed’‘Variable’‘SteppedFixed’£££VolumeVolumeVolumeP4IT Commercial Skills Development - Part 1
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