Locally owned stores argue that they may be expensive, but claim that's partly because, unlike chains, they can't spread overhead costs across multiple locations.
It is true that every commodity is produced along what economists call a "cost curve" — raising output may lower average or marginal unit costs by spreading overhead or achieving economies of scale, but it may also raise costs by forcing up the cost of inputs or incurring diseconomies of scale.
The producer cuts costs with a combination of effects; these include spreading overhead over larger volume, reducing inventory costs as the process becomes more rational and throughput time drops, cutting labor costs with process improvements, achieving greater division of labor, and improving efficiency through greater familiarity with the process on the part of the work force and management.
Most of the financial benefit to producers, they say, will come from spreading fixed overhead costs, like electricity, over a wider product base.
The idea was that with more assets over which to spread stock picking and overhead costs, the expense ratio would go down.
The lower cost of production with a large-scale plant results not only from the spreading of capital and other overhead costs, but also from the frequently smaller labour requirements per unit of output in the larger plant, an aspect which is of less importance in developing countries where labour costs are low.
Productivity, as usual, will suffer in a period of weak sales as overhead costs are spread over fewer units of output and as the disruptions of downsizing harm efficiency.
Mr. Omura said Aloha's technology could increase the per-satellite capacity to as many as 3,000 high-speed data streams, allowing overhead costs to be spread among eight times as many users.
Investors should benefit from economies of scale as 401(k) plans grow, allowing overhead costs to be spread over a bigger pool.
The overhead costs of COFC and TOFC are considerable.
