For those who want the fun & snazzy version of the textbook talk! Let's dive into the exciting world of business costs & revenue! 🎉🎉

•  Fixed Costs (🏢)
  • Definition: Costs that don't change, regardless of how much you produce.
  • Think of it as: Monthly Netflix subscription - whether you binge-watch or not, you still pay the same amount!
  • Time-related: Monthly, Quarterly, Bi-annually, Annually.
  • Real-world example: Paying $5,000/month rent. Even if the business goes on a week-long vacation, that rent isn't going anywhere.
  • Main point: Fixed costs stay constant in the short run, where at least one factor of producing stuff (like machinery) stays the same.
•  Variable Costs (📈)
  • Definition: Costs that change based on how much you produce.
  • Think of it as: Paying for the candy you eat. The more candy, the more you pay!
  • Time-frame: Can change in both the short run & long run.
  • Real-world example: Energy bills. Produce more toys in a factory = higher electricity bill.
  • Main point: If you produce nothing, you owe nothing!
• Direct Costs (🎯)
  • Definition: Costs that can be tied directly to producing specific goods/services.
  • Think of it as: The ingredients in your pizza – flour, cheese, toppings!
  • Real-world example: The chicken in a KFC bucket. No chicken = no bucket!
  • Main point: Directly associated with a product, department, or process.
• Indirect Costs (🌫)
  • Definition: Costs that can't be tied to a specific product/service.
  • Think of it as: Rent for the pizza shop. Even if you stop making pizzas, that cost is still there.
  • Real-world example: The security guard's salary at a mall. He's there whether one shop sells 10 items or 1,000.
  • Main point: Tricky to pin on one product. Also known as overhead costs.