Fixed and Variable costs

Question 1

What are fixed costs?

Answer 1

• Costs that do not change with output (use)

Question 2

Examples of fixed costs

Answer 2

• Rent
• Salaries
• Insurance
• Broadband

Question 3

What are variable costs?

Answer 3

• Costs that do change with output (use)

Question 4

Examples of variable costs

Answer 4

• Stock
• Utilities
• Wages
• Telephone

Question 5

How to calculate total costs?

Answer 5

• Fixed costs + Variable costs

Question 6

What is a semi-variable cost?

Answer 6

Costs that are composed of a mixture of fixed and variable components

Question 7

Examples of semi-variable costs

Answer 7

Costs such as electricity have a standing charge and a charge per unit used