behavior of costs in companies
This discussion is designed to get you to see the behavior of costs in companies with which they are familiar. You should identify and describe the company. Then, identify three different costs that behave differently. You should identify at least one fixed cost, variable cost and mixed cost and be able to justify their selections.
Think of a company with which you are familiar. Describe the company and their primary product(s)/service(s). Identify a fixed cost, a variable cost, and a mixed cost that company would incur and explain how you determined that those costs would fit those behavior patterns.
Post by classmate 1
Nike is a multinational corporation that insists on providing the most comfort and performance enhancing clothing. They are known for providing footwear, apparel, and sports equipment. This corporation is leading the market currently for sports apparel and has been for many years.
When it comes to variable costs, it varies with the level of output. Nike is identified to have administration, distribution, labor, and raw material as their variable cost. For the corporation’s survival, these costs are essential. Moving forward there are fixed costs, which are the business costs. Therefore, one being the employees hired for them to operate in an effective and efficient manner. Mixed costs are seen to be the utilities of the corporation. Examples of this for Nike would be their electric bill, transportation of goods and manufacturing costs.
Post by classmate 2
One company that I am familiar with is Amazon, which is an online platform that sells materials and delivers them to the customer. Amazon itself sells almost anything, including both its own products and those of the other sellers it works as a retailer for. One fixed cost for this company would be the salaries of those who work for it, as they dont change in total according to the volume of activity in the company (Miller-Nobles & Mattison, 2020). Whether Amazon has record sales and activity would not impact it.
In contrast, a variable cost would be that of packaging supplies, like boxes and tape, as this cost would change with the volume of activity that Amazon does (specifically how many orders they fulfill and how it can vary, etc.) (Miller-Nobles & Mattison, 2020). Finally, a mixed cost would be the utilities used in the buildings the company occupies, as there is typically a base amount charged for that, and any usage over that limit would incur an additional variable cost (Rogers, 2019). This would result in a cost that has elements of both fixed and variable costs, which is necessary for it to be considered a mixed one (Miller-Nobles & Mattison, 2020).
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