Costing

فصل Finance for Non-Financial Professionals ، بخش 2 : Costing

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But costing is, it's a very confusing area of, of accounting and of finance because there's a lot of subjectivity to it. And if you have him make just a standard square table maybe you're, you're paying for or using a cheaper laborer. Because there's not a lot of design in it, whereas if the table is going to be embellished with beveling and artwork and everything, you have to pay a very skilled laborer, and that's gonna incur more costs.

So in direct costing of the pizza, I'm gonna put in the, the price of the, of the flour, the price of the water, the yeast, the the tomato sauce, the cheese, any toppings I put on. Cuz if we were sitting there at my pizza restaurant and nobody walked in, I'd still have to pay that guy, right? If I take all of my costs, every single one, direct and indirect, and I divide those all up amongst my pizzas.

If I do my calculations and find that I need to sell 25,000 pizzas a month in order to Break-Even, probably not a very good business idea. A lot of times you can take a cost that's variable, and throw it into fixed, coz, it's easier that way. Cuz a lot of times my, my system tracks how much money I've sold, but it's not necessarily telling me how many pizzas.

For example, when business is bad and competition is high everyone is just kind of going through a rough spot. So, I'll bid that job at just over the direct cost because, I know other people are suffering too and they're gonna bring down their prices. Well, you know, I mean I'll always take extra business but if I take the job, I might have to pay some overtime cuz we're already at capacity, I'm already full.

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