Factors Affecting Variables

Factors affecting variable costs, including productivity and others that change the supply of and demand for labor

*Factors affecting fixed costs.

Any cost of the product must get paid no matter how many products are for sale, product must get paid at any cost. Successful business owners must acknowledge this. Fixed costs are expenses that must be paid no matter how many goods or service are sold or for sale (Colander, 2004). Variable cost is the other type of expenditures. Variable costs include the wages of employees, raw materials, electric power, and the cost of maintaining inventory. There needs to be an understanding between these two; fixed and variable cost (Colander, 2004). Understanding will help a company's success. Fixed cost like rent or salaries must be paid and is re-occurring. The only costs a business owner has immediate control over are variable costs.

Back in May 2012, Apple released a date to have the IPad 3 in stock for its customers. Apple never anticipated the high demand for it from its customers. Apple's high-demand for the IPad was not carefully thought out. The high-demand for supply and the demand for workers; cost Apple to pay the workers overtime and medical bills, because of the workers feet swelling from standing. Also the cost of production and the cost of expenses because had increased, due to Apple's factories needing to increase the lighting (Hesseldahl, 2012).

The Apple supplier located in China has incurred these expenses that will not affect the daily costs or expenses for apple. This company has a housing facility on the grounds that include a gym, pool, and medical facility for the employees (Hesseldahl, 2012). These facilities operated and owned by the company, have eliminated a high cost for the company. Apple has outsourced it business to overseas suppliers and will not be affected by the variable costs.

References:

Colander, D. C. (2004). Economics (5th ed.). Boston: McGraw-Hill/Irwin.

Hesseldahl, A. (2012). iPad Component Costs Leave Room for Price Cuts. Retrieved from http://www.businessweek.com/technology/content/feb2010/tc2010029_588063.htm