What is difference between fixed cost and variable cost?

What is difference between fixed cost and variable cost?

Variable costs change based on the amount of output produced. Variable costs may include labor, commissions, and raw materials. Fixed costs remain the same regardless of production output. Fixed costs may include lease and rental payments, insurance, and interest payments.

What is fixed cost and variable cost with example?

Fixed costs are time-related i.e. they remain constant for a period of time. Variable costs are volume-related and change with the changes in output level. Examples. Depreciation, interest paid on capital, rent, salary, property taxes, insurance premium, etc.

What are the 4 basic cost curves?

Figure 8.1. 3 presents the four remaining short-run cost curves: marginal cost (MC), average fixed cost (AFC), average variable cost (AVC) and average total cost (AC).

What’s the difference between fixed and variable?

Fixed-rate financing means the interest rate on your loan does not change over the life of your loan. Variable-rate financing is where the interest rate on your loan can change, based on the prime rate or another rate called an “index.”

What is a variable cost example?

Examples of variable costs are sales commissions, direct labor costs, cost of raw materials used in production, and utility costs. Variable costs are usually viewed as short-term costs as they can be adjusted quickly.

What is variable cost example?

What is an example of a variable expense?

Typical household variable expenses might include: The cost of household maintenance such as painting or yard care. General expenses such as clothing, groceries, and car maintenance. Resource expenses such as fuel, electricity, gas, and water.

What are 5 fixed costs?

Common examples of fixed costs include rental lease or mortgage payments, salaries, insurance payments, property taxes, interest expenses, depreciation, and some utilities.

What is fixed cost curve?

Total fixed cost curve depicts the relation between the total fixed cost of production and the level of output while other things being constant. Since total fixed costs are fixed, the curve representing it, is a horizontal line.

What expenses are fixed?

Examples of fixed expenses include:

  • Rent or mortgage payments.
  • Car payments.
  • Other loan payments.
  • Insurance premiums.
  • Property taxes.
  • Phone and utility bills.
  • Child care costs.
  • Tuition fees.

What are 5 fixed expenses?

Examples of Fixed Expenses Rent or mortgage payments. Renter’s insurance or homeowner’s insurance. Cell phone service. Internet service.

What are examples of variable expenses?

But some of the most common variable expenses you may pay include:

  • Gas.
  • Parking fees.
  • Groceries.
  • Dining out.
  • Clothing.
  • Personal care expenses.
  • Healthcare expenses.
  • Home maintenance and repairs.

Is salary a variable cost?

Annual salaries are fixed costs but other types of compensation, such as commissions or overtime, are variable costs.