Fixed, Variable, Total cost Flashcards
1
Q
What is a fixed cost
A
Cost of a business expense that does not change no matter if there is an increase or decrease in the number of goods sold
2
Q
What are example of fixed cost
A
Rents, salaries, equipment rental, insurances
3
Q
What is a variable cost
A
Cost that changes as the number of goods or services of the business changes
4
Q
What are examples of variable cost
A
electricity bills, Direct material, Direct labour, Packaging
5
Q
What is formula for total cost
A
total cost = total varible cost+ fixed cost
TC=TVC+FC
6
Q
A
