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Fixed Costs / Overhead Expenses

Example of what your fixed costs consists of.

Profit and Loss Statement for a commercial company usually follow this structure:

Each of the items in the Profit and Loss statement should be examined at regular intervals. You can always minimise costs or optimise performance.

Fixed Cost / Overhead expense

The questions you could ask when looking at the Fixed Costs / Overhead expenses could be:

• Can we reduce any of the Overhead Expenses without affecting the production income negatively?
  
  Do we need to buy stationary for 1.950 $ and what is it that we bought?
  
  Go through all entries in the Salary account.
  
  
• What do each staff member in the administration get in salary? Is it too high – or too low?
  
  
• Can we reduce some of the bank fees? - And what kind of expenses are included in bank fees?
  
  
• Why is the cash deviation so big?
  
  
• Can we find less expensive consultants which are just as good?
  
  
• Do we have to spend so much on transport?
  
  
• Does mileage on the cars relate to expenses on gasoline?
  
  
• Why are transport costs not put on variable costs under the different sections so it would reflect the sections´ use of the car?
  
  
• Which buildings have we maintained this year?
  
  
• Who did the maintenance work and on what price? Did we get an offer from three contractors?
  
  
• Have we chosen the best way of depreciation and do we have obsolete machinery?
  
  
• Are there banks who give a lower interest rate?

Some of the answers to these questions might give you some ideas for adjusting the Overhead Expenses.

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