Another day, and we’re back at the cookie factory.

Only, it’s bring your friends to work day and someone asked how much cost to make a cookie.

A good question, really.

We have a few costs.

Fixed costs: labor, insurance, rent, machinery.

Variable costs: flour, sugar, chocolate chips.

Direct costs: directly tied to the creation of the product, like the equipment and the ingredients.

Indirect costs: chairs for the employees, snacks, not directly tied to the production of goods.

Marginal costs: how much would it cost us to make 101 instead of 100 cookies?

Incremental costs: how much would it cost us to make 2x the number of cooked?

All these talk of costs, it’s time for a cookie.