3.3: Fixed and Variable Costs
- Page ID
- 65698
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Fixed Costs
Fixed costs remain in TOTAL but change per unit based on the actual amount of production. Here is a video to discuss these concepts.
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Examples of fixed costs include monthly rent, mortgage or car payments, employee salary, depreciation calculated under straight-line method, and insurance.
Variable Costs
Variable Costs remain the same PER UNIT but CHANGE in total. Watch this video for another explanation:
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Variable costs for a manufacturer would include things like direct labor of hourly workers, other wage employees, direct materials, applied overhead, sales commissions, and depreciation under units of production method.
Contributors and Attributions
- Variable Costs. Authored by: Education Unlocked. Located at: https://youtu.be/0Nmvjvhdex8. License: All Rights Reserved. License Terms: Standard YouTube License
- Fixed Costs. Authored by: Education Unlocked. Located at: https://youtu.be/Ah7EggKApHY. License: All Rights Reserved. License Terms: Standard YouTube License