Fixed cost is a cost that does not modify with an increase or decrease in the amount of goods or services produced. Fixed costs are everyday expenditure that has to be paid by a company, self-governing of any business goings-on. It is one of the two mechanism of the total cost of a good or service, along with variable cost.
It is very important to distinguish or differentiate business costs as they help in recognizes the cost figures that your business produce by selling goods or services. There are different types of costs such as direct costs, indirect costs, fixed costs, variable costs,
This classification is based on cost behaviour. It is one of the most useful classifications f.r the purpose of cost planning and control. Cost behaviour means how a cost will react or respond to changes in the level of business activity. Fixed Cost. A
Cost Classifications for Predicting Cost Behavior (Variable and Fixed Cost): Learning objectives of this article: Define and explain variable cost and fixed cost. Give examples of variable and fixed costs. What is the difference between variable and fixed cost. What are the types of
Regression Line Definition: A line fitted to an array of plotted points. The slope of the line, denoted by the letter b in the linear equation Y = a + bX, represents the average variable cost per unit of activity. The point where the
Definition and Explanation of Activity Based Costing System: Learning Objectives: Understand activity based costing system. How it differs from a traditional costing system? Activity based costing (ABC) is a costing method that is designed to provide managers with cost information for strategic and other
Learning Objectives: Define and explain contribution margin ratio. Calculate CM ratio. What is the importance and benefit of calculating CM ratio? Contribution margin percentage or average Definition of Contribution Margin Ratio Formula Calculation Importance Review Problems Contribution Margin Ratio Calculator Definition of Contribution Margin Ratio: The contribution margin as a percentage of total
Fixed Cost Definition: A cost that remains constant, in total, regardless of changes in the level of activity within the relevant range. If a fixed cost is expressed on a per unit basis, it varies inversely with the level of activity.
Effect of Change in Variable Cost, Fixed Cost and Sales Volume on Contribution Margin and Profitability: Learning Objectives: What is the effect of change in variable cost, fixed cost and sales volume on contribution margin and profitability? The following data is used to show