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Categories: Book printing >> Support Center
The Fixed and Variable Costs for a Book Printing Job
Origin:Image Printing  Data: 4/1/2011  Keywords: Book Printing Job Costs

To estimate the costs for a book printing job usually come under two headings. The fixed costs are incurred before the printing presses roll and do not change whatever the quantity of books ordered. They may include sums paid to external readers, translators, or contributors, legal fees, permission fees for the use of third-party copyright material, unless paid for by the author, payments to freelance copy-editors, proofreaders, illustrators, and designers (for both text and the cover), indexing, if not done by the author, although this charge may be put against the royalties, and payments to suppliers for typesetting, origination of illustrations, proofing, corrections.

The variable costs occur after the presses start to roll and depend on the quantity of books ordered. They include the costs of printing and binding, and the paper consumed. The quantity ordered would be the sales estimate plus an allowance for copies wasted or gratis copies given away, for example for review purposes. The total production costs are the sum of the fixed costs and the variable costs. The average cost of producing each copy, the unit cost, is calculated by dividing the total costs by the print quantity. The unit cost diminishes with increasing print quantities, falling rapidly on short printings of between, say, 500 to 2,500 copies and then more slowly. The rapid decline in unit cost results from the fixed costs being spread over larger quantities. Although the per copy cost of producing the book becomes progressively lower with increasing quantities, the total cost still increases. Therein lies the danger for editors preparing a costing. The temptation is to reduce the unit cost by increasing the print quantity - but if the books are not sold the publisher has sunk an even greater amount of cash into the book's production.

In economics, fixed book printing job costs are business expenses that are not dependent on the level of goods or services produced by the business. They tend to be time-related, such as salaries or rents being paid per month, and are often referred to as overhead costs. This is in contrast to variable costs, which are volume-related (and are paid per quantity produced). In management accounting, fixed costs are defined as expenses that do not change as a function of the activity of a business, within the relevant period. For example, a retailer must pay rent and utility bills irrespective of sales. Along with variable costs, fixed costs make up one of the two components of total cost, total cost is equal to fixed costs plus variable costs. Fixed costs are not permanently fixed; they will change over time, but are fixed in relation to the quantity of production for the relevant period. For example, a company may have unexpected and unpredictable expenses unrelated to production; and warehouse costs and the like are fixed only over the time period of the lease. By definition, there are no fixed costs in the long run. Investments in facilities, equipment, and the basic organization that can't be significantly reduced in a short period of time are referred to as committed fixed costs. Discretionary fixed costs usually arise from annual decisions by management to spend on certain fixed cost items. Examples of discretionary costs are advertising, machine maintenance, and research & development expenditures.

In business planning and management accounting for book printing, usage of the terms fixed costs, variable costs and others will often differ from usage in economics, and may depend on the intended use. Some cost accounting practices such as activity-based costing will allocate fixed costs to business activities, in effect treating them as variable costs. This can simplify decision-making, but can be confusing and controversial. In accounting terminology, fixed costs will broadly include almost all costs (expenses) which are not included in cost of goods sold, and variable costs are those captured in costs of goods sold. The implicit assumption required to make the equivalence between the accounting and economics terminology is that the accounting period is equal to the period in which fixed costs do not vary in relation to production. In practice, this equivalence does not always hold, and depending on the period under consideration by management, some overhead expenses can be adjusted by management, and the specific allocation of each expense to each category will be decided under cost accounting.

 
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As a professional book printing factory in China, Image Printing Packaging Ltd focus on book printing and packaging printing mainly for oversea and domestic customers. We are located in Shenzhen city, the book printing and packaging printing industrial center of China and even worldwide. Please be kindly note we offer a wide range of professional customed printing service with aggressive prices
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