Cost Structure

Cost structure refers to the overall expenses a business incurs to operate and deliver its products or services. It includes fixed costs, like rent and salaries, which remain constant regardless of sales volume, and variable costs, such as raw materials and production supplies, which change with production levels. Understanding cost structure helps a business determine pricing, manage profitability, and identify areas where costs can be optimized. It provides a clear picture of how money flows in and out, enabling better financial planning and strategic decision-making.