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Fixed Costs / Overhead Expenses

Example of what your fixed costs consists of.

Profit and Loss Statement for a commercial company usually follow this structure:

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.

If you don´t drive your business, you will be driven out of business.
- B. C. Forbes, founded Forbes Magazine

Gross Profit - how to act on it
SWOT Analysis + PO
Contribution Ratio vs Markup
Credit Sale
Contribution Margen or Gross Profit
Influence on Profits
Fixed Costs / Overhead Expenses
Terms of Sales and Delivery
Reduce Stock
Keep Control
The Art of Consultancy
What is Accountancy?
Principles in Accounting
Understand Financial Info
Safeguarding Your Assets
Help to Take Action
Close your Business