Fixed and Variable Costs Flashcards
1
Q
What are fixed costs
A
Business expenses that do not change
2
Q
What does fixed costs mean for a business
A
It keeps the business running without having an impact on production levels since the expenses stays the same
3
Q
What would be the fixed costs of a shoe shop
A
Rent salaries insurance
4
Q
What are variable costs
A
Expenses that change based on how much a business sells and produces
5
Q
Examples of variable costs
A
Raw materials
Packaging
Utilities
6
Q
What is the formula for total costs
A
FIXED COSTS + VARIABLE COSTS
