Join Jim Stice for an in-depth discussion in this video Risks and rewards of fixed costs, part of Breakeven and Cost-Volume-Profit (CVP) Analysis.
- Fixed costs make me nervous.…- Yes, and they should make every…small business owner nervous.…- For a small business owner,…fixed costs have to be paid even when you're just…getting your business started.…Even when your business is experiencing…a seasonal downturn.…- When the local economy is a little slow,…you still have to keep paying your fixed costs.…- When you take a vacation,…you're fixed costs keep ticking away.…- Even when you get sick and can't run your business,…you still have to pay all of your fixed costs.…- And when your customers are a little slow on paying you,…doesn't matter,…you still have to pay your own fixed costs.…
- Fixed cost increase the risk of doing business.…This kind of risk is called operating risk.…- I once had a friend who decided to start her own business.…She's a gifted writer and editor.…She planned to offer her services to professors…and graduate students as they wrote research papers.…- That sounds like a good business idea.…I know lots of professions and graduate students…who can use some help as they write their papers.…
Want to learn more? Learn about three types of accounting—financial, managerial, and income tax—in their Accounting Fundamentals course.
- Breaking down fixed and variable costs
- Pricing a service to cover costs
- Identifying high contribution margins
- Calculating a company's breakeven point
- Conducting breakeven analysis with breakeven equations
- Computing target net income
- Exploring sensitivity analysis