why is operating cost important to a business?

Answer 1

To make accurate assessments, as to what the business will charge for their services.
..and:
To maintain an ongoing account of productivity, and inventory (if applicable) Also to always be aware operations, making regular changes and/or upgrades as needed.

Think of it this way, Johnny opens a Starbucks. But he decides that he's going to charge .25 cents, per drink. Any drink, every drink. And he's only going to charge .10 cents for anything in the pastry case.
Without an accurate operating cost (or other form of a Profit and Loss Statement) Johnny will go bankrupt, before one fiscal quarter, because it simply isn't feasible to maintain inventory, payroll, and insurances, when in actuality it costs $3.10 to offer a quad shot, Venti Caramel Macchiato w/ extra vanilla and extra caramel. Along with a reduced-fat Turkey Bacon, egg w/reduced-fat white cheddar croissant..

Answer 2

Because the amount spent to produce the goods/service (the operating costs) affect how much product/service you need to sell to break even and ultimately turn a profit.

High operating costs will choke a business because even if huge amounts of money is coming in its all going back out again to pay for running the organisation!

Answer 3

your operating cost is what it says on the tin, the cost of running the business, from cost of products, to rent, to wages to stamps, in short, everything that you pay out.
This is then out against what you have recived in, ie, the sales. Once you have deducted the costs, you then have your profits, and you can see if you have made an acutal profit or a loss. If costs are particulary high, then you will never make a profit, and this needs addressing or the business will fail. For example, if you have too many staff, this will affect profits, so sack some, or if your rent is high, then perhaps move to a lower rent place.

Answer 4

Because if it costs too much to run the business it wont be making any money, which is the whole point of running a business in the first place.

Answer 5

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Answer 6

look into what they are doing the united kingdom on the 2d. Small employer is preserving the country solid on the 2d. British Conservatives are an extraordinarily diverse to the U. S. ones.

Answer 7

to calculate efficientcy ratios to attract investment