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FIXED COSTS |
VARIABLE COSTS |
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These are costs that do not increase or decrease as output
fluctuates. For example, salaries of employees, rent for premises and
advertising costs. |
These change as output
increases and include such things as materials required to manufacture the
product. If production increases then more materials are needed and
consequently costs increase.
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TOTAL COSTS = FIXED COSTS + VARIABLE COSTS |
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EXAMPLE - Imagine you have designed a clock and
intend to produce it on a large scale (called mass production). The costs
would have to be calculated in detail before you could secure a loan from a
bank which would allow you to set up the business/company. The table below
suggests a method of setting out the costs. |
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Complete the table above by filling in the total costs and
unit costs. |
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UNIT COST = TOTAL COST / NUMBER PRODUCED |
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Costing a project with a view to producing it on a mass
production line is an aspect of design work and you must present this as
part of the development section of the design process. Having decided which
of your ideas is the best, ‘cost’ its’ manufacture. |
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| EXAMPLE
COSTING SHEET |
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CLICK HERE FOR DESIGN PROCESS INDEX
PAGE |
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