Difference between variable and fixed costs




                      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

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