Understanding the causes of the costs allows management of those costs. Each operation can be subdivided into a number of activities. Fixed and Variable Costs Costs which change as the cost driver changes are called variable costs. An example of a fixed cost is the chief executive's salary. This argument assumes all costs vary with the number of students.
Unit costs are dangerous.
For a lecturer, the labour cost of a unit is a fixed cost. The solid line is revenues, the dashed line is costs. This is unrealistic. Technically the cost relationship is a random variable. Statistical techniques can be used to estimate the standard deviation.