ЁЯзд- Capacity Cost is associated with the capability to produce and deliver a certain level of output.
ЁЯзд- It is an expenditure or cost incurred by a company to expand its business operations.
ЁЯзд- These costs may include items such as lease agreements on larger facilities, purchase and depreciation of new equipment, as well as increased costs to operate and maintain those larger or newer assets.
ЁЯзд- For any business, it is difficult to avoid costs like insurance, rent payments, property taxes, depreciation on equipment, etc. These are examples of capacity costs.
Advantages
- This type of cost helps to ensure that the production costs are kept low while maximizing profits.
- Improves the quality of the product produced & enhances the efficiency of the processes.
- Helps reduce the amount of inventory held by a company, which can help to reduce overhead costs.
Disadvantages
- High cost of energy and infrastructure
- Limited access to capital
- Lack of reliable transportation networks
0 comments:
Post a Comment