Sep 18, 2010
I know a bit about cost accounting. It was my occupation at Tedious Systems for nearly a decade.
A really good thing for a business is increasing sales without increasing fixed costs.
In a nutshell fixed costs are those things that don't change with your volume of business. Rent on a building is a good example; you pay the same each month no matter how many customers come through the door.
So why do I bore you with this? It relates to a chronic disagreement that I have with the management of our store.
For instance, in our store we provide a lock rekeying service. If you buy a lock from us we will rekey it to your existing key for $5. If you bring in a lock bought elsewhere, it is $8.
A guy I know is a handyman, he fixes up repossessed houses for banks. One thing he does is that he takes off all the locks and has them rekeyed, which is where I come in.
This guy asked me one time about rekeying a half dozen locks for him. I did them for him for $5 per rather than $8. The boss doesn't like this sort of deviation from the rules because, and I am not making this up, he would expect us to do it every time.
About 99% of the rekeying of a lock is having the right tools and knowing how to do it. There is about 5 cents of material involved in each. Since I'm already at work and being paid, the cost to the store for each additional lock I bring in is a nickle. The profit is $4.95. The profit on each lock my pal takes elsewhere is zero.
Sometimes you have to ignore the bosses for their own good.
Things in this blog represented to be fact, may or may not actually be true. The writer is frequently wrong, sometimes just full of it, but always judgmental and cranky