What is meant by fixed cost?
Fixed costs are costs that do not change when sales or production volumes increase or decrease. This is because they are not directly associated with manufacturing a product or delivering a service. As a result, fixed costs are considered to be indirect costs.
What is fixed cost with example?
Fixed costs are costs that are independent of volume. Fixed costs tend to be costs that are based on time rather than the quantity produced or sold by your business. Examples of fixed costs are rent and lease costs, salaries, utility bills, insurance, and loan repayments.
What is a fixed cost in economics?
Fixed costs are costs that do not vary with the amount produced. Examples are interest on debt, property taxes and rent. Context: Economists also add to fixed cost an appropriate return on capital which is sufficient to maintain that capital in its present use.
What is fixed & variable cost?
Definition. Fixed cost is referred to as the cost that does not register a change with an increase or decrease in the quantity of goods produced by a firm. Variable cost is referred to as the type of cost that will show variations as per the changes in the levels of production. Nature of cost.