Answer to Question #179105 in Management for Bianca

Question

What are the fixed and variable costs involved in starting and running a coffee shop?

Answer 1

Fixed costs are costs that are constant and do not change over time. For instance, when starting a coffee shop, there are certain costs that are fixed. Fixed startup costs include; legal and administrative fees, furnitures and fixtures, coffee equipment tools, and remodeling costs. Other fixed costs includes, the rent, payroll, taxes, business permits, licenses, and insurance. Variable costs are those that change depending on the business activities. These costs vary based on the quantity of products consumed in a day. They include; baked goods, milk, coffee beans, coffee cups and others. For example, if the coffee shop owner sells a lot of coffee in a day, they will need more coffee beans, milk, and cups.