kitler53 said:
Netyaroze said:
kitler53 said:
leo-j said:
pastro243 said:
rafichamp said:
Sony has stated the more they sell the more they make in profit due to manufacturing costs being reduced tremendously |
This may be true, in mass production the more you produce you can reduce the costs, I dont remember the explanaition though.
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neither do I but its something I leanred in economics
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when you make a cake you need two types of things: the ingredients - like flour and sugar, and the equipment - like a mixer.
the total cost to produce a cake is the cost of the ingredients AND the total cost of the equipment divided by the number of cakes produced.
if you make 1 cake then to be profitable that one cake must account for the total cost of the mixer.
if you make 1 million cakes then each cake must account for one millionth the cost of the mixer thus each cake is cheaper to make.
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You explained the fix costs pretty well.
just to be a smart ass you forgot somethings aswell:
You forgot to mention that Sony first had to develop a new cake and that time is money aswell.
To invent a new cake you have to invest some time and after you invented him you have to spend time doing the cake and you have to use some energy too. And you have to take in account even your house and kitchen costs. For privat persons it is a ridicolous low amount but fo a company its a giant amount because the facilitys dont serve other purposes.
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lol, yes my analogy is oversimplified but if i remember correctly leo-j is in high school right now. i was just trying to clarify the overall concept of fix vs. variable costs in a way that would be easy to ...wait for it... digest. xD
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Oh damn, you are quite punny :D
