12/27/2023 0 Comments Variable cost meaning![]() So, a company’s fixed costs do not change with the volume of production. Since the assets on which costs are based do not change, the total cost arising due to the assets do not change too.Īs noted, fixed costs do not change irrespective of whether the company produces goods or services or not. This is so because it is often hard to see any palpable change in the cost structure of the fixed assets of a company. Moreover, the company has to pay this cost throughout its operational period without any palpable change whatsoever.Īlthough fixed costs may be subject to change, it is often rare to notice. Regardless of the operations and productivity, these costs must be borne by companies all the time.Ī good example of fixed cost is the commercial rent for the structure occupied by the company.įixed cost remains unchanged for a considerable period of time and has to be paid irrespective of whether the company makes a profit or not in the case of fixed costs. These costs remain the same for a considerable period as they are usually related to the fixed assets of a firm. ![]() That is why knowing more about costs is important for everyone.Ī company usually makes two types of costs depending on the nature of change along with the production volumes of the company.įixed cost refers to costs that remain unchanged for the company for a long period of time. Saving funds by managing costs efficiently goes a long way in making a company profitable. ![]() The companies therefore must be aware of the costs because the unnecessary costs may harm the financials absurdly. It is impossible to think about a company with no cost. Every company incurs costs during its operations. ![]()
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