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What are costs?

Costs are the money a company spends to perform or produce its main activity.

You can get an overview of your costs digitally with Acubiz

With the Acubiz app, you can streamline your expense management directly on your mobile, giving you a clear overview.

Costs can be divided into two categories: fixed costs and variable costs. Both types of costs apply to all businesses.

Fixed costs

Fixed costs are those related to the company’s operations. As the name suggests, they remain constant every month (or quarter) and are also known as capacity costs.

In a company, fixed costs can be divided into three types:

  • Sales promotion costs directly affect sales in your company. This could include marketing expenses.
  • Cash capacity costs can include wages, cleaning, and rent and decrease when capacity is unused.
  • Depreciation covers costs for vehicles, furniture, and similar items that do not decrease when capacity is not used.

Variable costs

While fixed costs do not change based on production and services, variable costs do.

This type of cost will vary depending on sales. For example, the food you sell in a restaurant is a variable cost. Costs will typically differ up and down, depending on the number of guests and the number of ingredients you need to purchase.

Variable costs are directly linked to a company’s production and will increase with production growth.

When your costs increase

Most people will say that rising costs are not good news. In many cases, this is also true, for example, if the price of raw materials increases in a restaurant business.

If variable costs increase in a known production company such as LEGO, production is also increasing. And that naturally leads to greater sales. In that case, increasing variable costs is good news for the company.

Bookkeep your costs

All companies must prepare a statement of earnings for an accounting period.

This is done through bookkeeping, which keeps track of all company income and expenses.

The bookkeeping of your receipts ensures that you keep track of the following:

  • Income statement – your income and expenses
  • Balance sheet – your liabilities and assets, such as debt and value.

Do you want to know more?

With an app like Acubiz, you can quickly and easily manage your expenses with digital accounting, so you always have a clear overview of your company’s finances.

Contact us if you want to know how we can help your business or book a free online demo to learn more.


What are costs?
Costs are the money that a company incurs to perform or produce its core activities.
Financial costs are the costs that arise as a result of a company’s financing. This can include interest on loans, for example.
Variable costs are costs that change depending on production or sales. This can include raw materials for producing a product, for example.
Fixed costs remain the same every month or quarter regardless of production and sales. This can include rent or salaries for permanent employees, for example.

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