Building a cost structure involves several key steps:
Identify Costs: List all expenses associated with the business, including both fixed and variable costs. Classify Costs: Categorize these costs into fixed and variable to understand how they behave relative to production levels. Analyze Costs: Use tools like cost-volume-profit analysis to understand how changes in production affect costs and profitability. Allocate Costs: Assign costs to different products, services, or business units to determine their profitability.