Costs Relating to Decisions
When evaluating specific decisions that affect output, understanding how costs fluctuate based on output will help to calculate certain costs.
Suppose you are a manager at a candy manufacturer in charge of starting a new plant. In addition to the many decisions managers make on a daily basis, you also need to buy a plant in which to produce the candy and hire staff to manage the plant, sell the candy, and purchase materials.
You determine that the price of the plant is $1 million and you will need to hire 10 employees.
