Then they can use breakeven analysis to find the price at which they begin to show a profit. B. Cost Analysis 1. Two types of cost a. Fixed costs are all the expenses that remain the same no matter how many goods or services are sold. Variable costs change according to the level of production and sales.
Total cost is the total amount spent to produce every unit, made up of fixed and variable costs.
Your marginal cost is the change in total expense of producing one more unit. Marginal cost differs for every additional unit you produce. In some industries, the change is very small. Determining exact costs isn't always easy, in part because the cost of serving one customer may not be the same as the cost of serving another. C. Marginal Analysis 1.