what are fixed and variable costs?
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Variable costs vary 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.
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fixed cost. expenses that remain constant in total regardless of changes in activity within a relevant range. Examples are rent, insurance, and taxes. ... Fixed costs include salaries of executives, interest expense, rent, depreciation, and insurance expenses.
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Common examples of variable costs include direct materials, direct labor, supplies, fuel and power, spoilage costs, receiving costs, royalties, overtime premium, sales commissions, and delivery expenses.
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Marginal costs are a function of the total cost of production, which includes fixed and variable costs. Fixed costs of production are constant, occur regularly, and do not change in the short-term with changes in production. ... By contrast, a variable cost is one that changes based on production output and costs.
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Depreciation is a fixed cost, because it recurs in the same amount per period throughout the useful life of an asset. Depreciation cannot be considered a variable cost, since it does not vary with activity volume.
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A company's total cost is composed of its total fixed costs and its total variable costs combined. Variable costs vary with the amount produced. ... On the other hand, a fixed cost does not vary with the volume of production. A Fixed cost does not change with the amount of goods or services a company produces.
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Variable costs are those that rise and fall with the production volume. Typically found in cost of goods sold, it does not always include everything in COGS.
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Fixed costs are expenses that remain the same regardless of production output. ... Examples of variable costs are sales commissions, direct labor costs, cost of raw materials used in production, and utility costs.
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Variable costs vary with increases or decreases in production. Fixed costs remain the same, whether production increases or decreases. Wages paid to workers for their regular hours are a fixed cost. Any extra time they spend on the job is a variable cost.
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There is no difference between Semi Variable Cost and Semi Fixed Cost. ... But there is difference between Fixed Cost and Semi - Variable Cost. Fixed cost: A cost that does not change, in total, with the change in activity is called fixed cost.
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Electricity is a good example of a semi-variable cost. The base rate for service may be constant, but as production grows, power consumption and the company's electricity bills go up. In other words, there is both a fixed and variable aspect to semi-variable costs.
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['Variable cost.', 'Fixed cost.', 'Stepped fixed cost.', 'Semi-variable cost.']
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Absorption costing includes all the costs associated with the manufacturing of a product, while variable costing only includes the variable costs directly incurred in production but not any of the fixed costs.
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Absorption costing includes all the costs associated with the manufacturing of a product, while variable costing only includes the variable costs directly incurred in production but not any of the fixed costs. ... Direct costs are usually associated with COGS, which affects a company's gross profit and gross profit margin.
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Direct costs can be fixed costs such as the rent for a production plant. ... Variable costs can also be indirect costs such as electricity for the production plant since it can't be tied to one specific product.
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In accounting, variable costs are costs that vary with production volume or business activity. ... Fixed costs include various indirect costs and fixed manufacturing overhead costs. Variable costs include direct labor, direct materials, and variable overhead.
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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 specific business activities.