Difference between variable costs & fixed costs
Fixed costs
Hint
The fixed cost is constant in total but it changes per unit
F. U . C = 4000 $/ 10 units = 400 $
F .U . C = 4000$ / 20 units = 200 $
F. U . C = 4000$ / 30 units = 133.33 $
F. U . C = 4000$ / 40 units = 100 $
IF you are dealing with the fixed cost , focus on the total cost
The cost is fixed when it remains the same whatever the significant change in volume of production or the level of activity
Variable costs
If you are dealing with the variable cost , focus on the per unit cost
The cost is variable when it changes according to any change in the volume of production or level of activity
Considering a cost as a variable or fixed is an important input for the management for making decisions
Fixed costs
Hint
The fixed cost is constant in total but it changes per unit
F. U . C = 4000 $/ 10 units = 400 $
F .U . C = 4000$ / 20 units = 200 $
F. U . C = 4000$ / 30 units = 133.33 $
F. U . C = 4000$ / 40 units = 100 $
IF you are dealing with the fixed cost , focus on the total cost
The cost is fixed when it remains the same whatever the significant change in volume of production or the level of activity
Variable costs
If you are dealing with the variable cost , focus on the per unit cost
The cost is variable when it changes according to any change in the volume of production or level of activity
Considering a cost as a variable or fixed is an important input for the management for making decisions
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