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Fixed costs are costs that will be the same for the next year. In my Construction Business fixed costs are office rent, office utilities, advertising costs, etc. In a year, these costs can be known ahead of time and won't need to change even if my company does more work.

Variable costs are costs that can rise or fall depending on how much work I contract. Say I sign up 20 jobs this year, I will have to hire more employees, buy them trucks, rent them cell phones, and those costs will correspond to the amount of work going on, therefore variable.

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16y ago
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15y ago

Well, As name states itself, a fixed cost is a cost that an organisation has to bear whether it produces something or not but on the other hand, the variable cost is that cost which varies with the production level. For Example, in its first year, a manufacturing company is producing 100 units of a product and the fixed cost they have to bear is Rs.10,000 and the variable cost is Rs.20 per unit then the cost will be: FC - 10,000 VC - 20,000 For second year it produces 90 units, then the costs will be: VC - 18,000 FC - 10,000 FC has not direct link with production but the VC does have. I hope this is sufficient. Regards, smart_jains@rediffmail.com

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15y ago

Fixed costs do not vary with the amount of whatever is being produced. An example might be rent and rates, electricity, hire purchase costs of machinery.

Variable cost depends on the amount of output and is usually based on how many units are produced. eg if you produce a pair of trousers, then the material might cost you £2; if you produce 1000 pairs of trousers then this would cost you £2000 (1000 x £2) without taking into consideration any discounts you might be for the bulk purchase of the fabric.

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11y ago

FIXED COST:

Fixed is that kind of cost which don't change and remain fixed at a time this will be fixed cost.

VARIABLE COST:

Variable cost is that kind of cost which don't remain fixed but change this is called

variable cost

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13y ago

Fixed cost is a cost which can't be changed like production cost.

Variable cost is a cost Which can be vary depend upon the transport

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10y ago

user elec utility cost 3 ph 277 vs 120 sgl ph fluorescent

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Q: Can you distinguish between fixed costs and variable costs?
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What are the limitations of absorption costing?

Absorption costing does not understand the importance of fixed costs. In absortption costing, fixed costs are absorbed to unit, therefore it is hard to distinguish between variable and fixed costs. And also, the variability of profit will cause confusion, the reason is that the net profit varies with both sales and stock changed under absorption costing. Absorption costing does not understand the importance of fixed costs. In absortption costing, fixed costs are absorbed to unit, therefore it is hard to distinguish between variable and fixed costs. And also, the variability of profit will cause confusion, the reason is that the net profit varies with both sales and stock changed under absorption costing.


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Average total cost is the average of all your costs. This is your Fixed Costs and your Variable costs. Average Variable Cost is the average of your costs that can fluctuate.


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There is a huge relationship between fixed cost and variable cost. These two costs are the opposite of each other.


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Generally variable costs are relevant costs but if due to any decision fixed costs are also going to affected then fixed costs are also relevant costs.


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a semi fixed cost moves upward in a step where semi variable cost begining at a given base level


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There are variable and fixed costs. Businesses can manipulate the variable costs, but they cannot change their fixed costs in business.


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Type your answer here... fixed cost + variable cost = total cost


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The three types of cost you are referring to are Fixed, Semi Variable and Variable Costs. On a well though out COA the janitorial costs would fall under administrative costs. Thus fixed.


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No. But: ATC = AVC + AFC Or TC = VC + FC


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Average total cost is the average of all your costs. This is your Fixed Costs and your Variable costs. Average Variable Cost is the average of your costs that can fluctuate.