From the course: Introduction to Business Analytics (2020)
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Cost data
- Studying the costs your organization is incurring enables you to understand the real expense of doing business. Oftentimes, small expenses can fall through the cracks, which is why it's very important to study this kind of data. There are two basic forms of costs that your organization will face, and they are fixed and variable costs. Fixed costs will stand stable, whether you're killing it sales-wise, or not a single deal has come through your door. An example of this is the overhead you pay to rent your office. The other kind of cost is variable, and this scales up and down, depending on another factor. For example, raw materials will fluctuate based on how many orders come in. One of the biggest values of studying cost data is that it empowers you to think strategically about your pricing model. You want to maximize the amount of profit margin, which is calculated by price minus variable cost. In most cases, you…
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