| Archive for Downsizer For an ethical approach to consumption |
| Lorrainelovesplants |
direct/indirect overheadsI need someone to give me a clear definition (think: accounting for dummies).
So imagine on your business plan you have your sales..........then you deduct your direct/variable costs which gives you your gross profit........then you deduct your overheads/fixed costs.......... please someone explain this. Im presuming stock/supplies is a fixed cost, and electricity is an overhead......but Im unsure which is what. 
|
| JB |
If you're making bread ...
Flour is a variable cost as what you spend on flour varies according to how much bread you make. Rent for the bakery is an overhead / fixed cost as it is fixed regardless of how much bread you bake. (or at least that's how I understand it) |
| Rob R |
JB has got it right. Things are a little different for agricultural businesses, so it all depends what you mean by 'stock'. Stock for resale is generally something that you will sell on within one year, and is a current asset, whereas breeding livestock is a fixed asset (the former tends to increase in value, whereas the latter depreciates with time).
But back to what you asked- stock is usually a variable cost and electricity is a fixed cost (an overhead). |
| Lorrainelovesplants |
Thanks guys, got it now!
|
| arvo |
Have you read 'So you think you're in business?'
Was published eons ago by the BBC I think after some OU series on business start ups or something similar. The TV show had John Cleese and Ronnie Corbett in it as I seem to remember. Anyway, it goes into all that kind of stuff, not just the jargon, but why you need to know all of it. See if you can get hold of a copy. I used to have one but couldn't swear we've still got it after the move and a good clear-out to fit into a smaller house. (If I come across it you can have it.) It is the kind of thing your library might have and after 16 odd years self-employed, I can recommend it. Good luck (I quite like the planning and marketing bits, that probably makes me a right saddo  )
|
| Lorrainelovesplants |
Will trit trot down to the library and ask.
Right after I try and find a cash flow. I hasnt to add this isnt for me - its for him indoors, (who has sneakily chomped his way trough a box of Thorntons that was gifted to me last week and I was saving or something special. Thee's only 5 left now!  )
Ungrateful git! |