It means: dividing
the cost of the business (value creation and value delivery costs) over the
number of units you intend to create over a certain period of time
-
That is a way of treating huge
investments as variable costs
-
That is very easy way to
determine the initial cost of the single unit
-
It helps also to make an
initial prediction when you will reach the breakeven point
-
Amortization relies on the
ability to predict the production rate and the demand. Well, Prediction is a
very tricky business. Your prediction must be as close to reality as possible:
-
You must provide enough
capacity to fill the demand
And not provide tooo much capacity and waste
money to fulfill orders that aren’t there
No comments:
Post a Comment