Fixed Costs / Overhead Expenses

Related answers:

Sale / Turnover
- Variable Costs / Used Goods
= Gross Profit
- Fixed Costs
- Depreciation
- Interest
= Profit

Each of the items in the Profit and Loss statement should be examined at regular intervals. You can always minimise costs or optimise performance.

Fixed Cost / Overhead expense
The questions you could ask when looking at the Fixed Costs / Overhead expenses could be:

• Can we reduce any of the Overhead Expenses without affecting the production income negatively?
• Do we need to buy stationary for 1.950 $ and what is it that we bought?
• Go through all entries in the Salary account.
• What do each staff member in the administration get in salary? Is it too high – or too low?
• Can we reduce some of the bank fees? - And what kind of expenses are included in bank fees?
• Why is the cash deviation so big?
• Can we find less expensive consultants which are just as good?
• Do we have to spend so much on transport?
• Does mileage on the cars relate to expenses on gasoline?
• Why are transport costs not put on variable costs under the different sections so it would reflect the sections´ use of the car?
• Which buildings have we maintained this year?
• Who did the maintenance work and on what price? Did we get an offer from three contractors?
• Have we chosen the best way of depreciation and do we have obsolete machinery?
• Are there banks who give a lower interest rate?

Some of the answers to these questions might give you some ideas for adjusting the Overhead Expenses.
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Copyright © 2009 Dynamic Business Plan          07-02-2012