Understanding Facility Costs
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Continuous ImprovementUnderstanding Facility Costs

Understanding Facility Costs

0.25 Hrs
SKU: RVCT-457

Discusses the relationship between revenue, cost and profit. Illustrates the importance of reducing both big and small waste streams at a facility.

Course Details | FAQ | Transcript
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Understanding Facility Costs
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Course Details

Learning Objectives


• Describe the relationship between a company’s profits, revenue, and costs
• Describe how reducing costs increases profits
• Describe why workers should care about reducing costs

Specs

Course Level
Intermediate
Languages
English
Compatibility
Audio, Video
Based on:
Industry Standards and Best Practices

Author | Vector Solutions

With over two decades of experience designing advanced 3D animated courseware and developing our proprietary learning management software, we pride ourselves by having developed over 1,000 safety and operations training modules, which have helped train over 250,000 workers worldwide. Our highly experienced team provides the industry with a simple and high-quality means of training their workforce. Whether your team consists of 25 people or an enterprise with thousands, we’re here to help.

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Frequently Asked Questions

What contributes to a facility’s costs?

Cost refers to ay expenses a company has, including paying workers, buying materials and equipment, or marketing. Waste can also significantly contributes to a company’s operating costs.

What is revenue?

Revenue is the money that comes into the company by providing services or selling products. Revenue is the opposite of cost, which is the money that goes out of a company.

What is profit?

Profit is the company’s total revenue minus its total costs. A company can have revenues of $10 million, but if their costs are $9 million, their profit will only be $1 million.

Why does a company’s costs matter to its workers?

The more a company can reduce costs, the higher its profits will be. The more successful a company is, the more job security and opportunity the company’s employees will have.

How can individual employees help to reduce costs?

Since workers use a facility’s equipment more than anyone, they are more likely to spot unnecessary costs. Workers should be on the lookout for ways to lower energy costs, reduce consumption of essential resources, and minimize waste.

Sample Video Transcript

Let’s look at the business terms, “revenue” and “profit”, and how they relate to each other. Revenue is the money that comes into a company. Revenue is the opposite of cost, which is the money that goes out of a company. Profit is the company’s total revenue minus its total costs. Companies can have large revenues without having large profits. For example, a company can have $50 million in revenue in one year, but if it has $49 million in cost, it only has $1 million in profit for that year. Another company might also have $50 million in revenue, but could have $60 million in costs. To anyone who doesn’t fully understand the company’s costs, the company might appear very successful because of the high revenue. This company would have a negative profit, otherwise known as a “loss”. In the modern, highly competitive business world, there are many companies with large revenues, but low profits. For these companies, every cost that can be reduced makes a difference.

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