Simon Zhong

Cost analysis help client increase profit - a Proccounting successful story

Cost management is crucial to your business profit. Effective cost control starts from your understanding of cost behavior - how a specific cost behaves in response to the change in the level of your business activities. Does it rise, fall, or remain constant as sales rise or fall? If a particular cost is expected to change, by how much will it change?  To answer these questions, you must understand the difference between fixed costs and variable costs, the two main categories of costs based on cost behavior. A fixed cost is a cost that does not change in total despite changes in sales or productions. A variable cost is a cost that changes in total in proportion to changes in sales or productions.

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