Economics for Engineers
Fixed cost A fixed cost is a cost that does not change with an increase or decrease in the amount of goods or services produced or sold. Fixed costs are expenses that have to be paid by a company, independent of any business activity. Examples Depreciation, Rent, Salary, Insurance, Tax etc. What is a 'Variable Cost' Variable costs are those costs that vary depending on a company's production volume; they rise as production increases and fall as production decreases. Examples Material Consumed, Wages, Commission on Sales, Packing Expenses, etc. Difference Between Fixed Cost and Variable Cost Comparison Chart BASIS FOR COMPARISON FIXED COST VARIABLE COST Meaning The cost which remains same, regardless of the volume produced, is known as fixed cost. The cost which changes with the change in output is considered as a variable cost. Nature Time Related Volume Related Incurred...