Identify the Difference Between Start Up and Operating Costs, Variablecpsts and Fixed Costs

Topics: Costs, Cost, Variable cost Pages: 1 (297 words) Published: June 24, 2013
Task 1
Task 1

A start-up cost is a cost that you start with for example in the flower shop it would be a deposit on the shop and the first month’s rent. Also the first lot of stock, advertisement a sign, table, counter, till and a credit card machine. The operating costs are costs that you carry on paying for throughout the time your business is open, for example in the flower shop they would be rent, wages, heating and lighting, insurance, loan interest, drawing (personal salary) , ribbons, stock, boxes and plastic sheets. So the difference between the two above would be that start-up costs are only when the business is starting to get up and running and the operating costs are something you pay for throughout the time your business is open.

Fixed costs are a part of operating costs but fixed costs would have one price that doesn’t change throughout the time your business is open that’s why they call it fixed, the fixed costs would be: rent. This would cost £700 per month, mages. This would cost £500 per month. Heating and lighting would cost £200 per month, insurance would cost £160 per month, loan interests cost £40 per month on top of how much you had loaned to you and drawings (personal salary would cost £400 per month. Fixed costs do not vary without put, so weather the flower shop gets loads of customers or not they still have to pay fixed costs. A variable cost is a cost that can vary throughout the time your business is open, a good example for the flower shop is packaging , as the more flowers you sell the more packaging you would need, the same as ribbon, plastic sheets and gift tags.
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