costs are classified as fixed or variable on basis of
Answers
VARIABLE COSTS
1) These are the costs which changes/vary in direct proportion to the changes in the "level of activity".
2) 'Cost per unit' for a particular period and within certain output limits , remains constant
3) 'Total cost' changes in the same proportion and in the same direction to the changes in the level of activity.
4) Examples : Direct Raw Material. Direct Labour.etc.
FIXED COSTS
1) These are the costs which don't change /vary with the changes in the level of activity
2) These are the costs which are incurred for a particular period and total cost, for that period and within certain output / activity limits ,remains constant.
3) Cost per unit is inversely proportionate to the level of activity / number of units i.e., output increases ,cost per unit decreases and vice versa.
4) Examples : Rent, Administration staff salary etc.
ғɪxᴇᴅ ᴄᴏsᴛ⤵️⤵️⤵️⤵️⤵️⤵️
>ғɪxᴇᴅ ᴄᴏsᴛ ᴀʀᴇ ᴛʜᴇ ᴄᴏsᴛ ɪɴᴄᴜʀʀᴇᴅ ᴏɴ ғɪxᴇᴅ ғᴀᴄᴛᴏʀ ᴏғ ᴘʀᴏᴅᴜᴄᴛɪᴏɴ .
>ғɪxᴇᴅ ᴄᴏsᴛ ᴅᴏ ɴᴏᴛ ᴄʜᴀɴɢᴇ ᴡɪᴛʜ ɪɴᴄʀᴇᴀsᴇ ᴏʀ ᴅᴇᴄʀᴇᴀsᴇ ɪɴ ᴏᴜᴛᴘᴜᴛ.
>ғɪxᴇᴅ ᴄᴏsᴛ ʀᴇᴍᴀɪɴ ᴄᴏɴsᴛᴀɴᴛ ᴇᴠᴇɴ ᴡʜᴇɴ ᴏᴜᴛᴘᴜᴛ ɪs ᴢᴇʀᴏ.
ᴠᴀʀɪᴀʙʟᴇ ᴄᴏsᴛ⤵️⤵️⤵️⤵️⤵️⤵️
>ᴠᴀʀɪᴀʙʟᴇ ᴄᴏsᴛ ᴀʀᴇ ᴛʜᴇ ᴄᴏsᴛ ɪɴᴄᴜʀʀᴇᴅ ᴏɴ ᴛʜᴇ ᴠᴀʀɪᴀʙʟᴇ ғᴀᴄᴛᴏʀ ᴏғ ᴘʀᴏᴅᴜᴄᴛɪᴏɴ.
>ᴠᴀʀɪᴀʙʟᴇ ᴄᴏsᴛ ɪɴᴄʀᴇᴀsᴇ ᴡɪᴛʜ ɪɴᴄʀᴇᴀsᴇ ɪɴ ᴏᴜᴛᴘᴜᴛ ᴀɴᴅ ᴅᴇᴄʀᴇᴀsᴇ ᴅᴇᴄʀᴇᴀsᴇ ɪɴ ᴏᴜᴛᴘᴜᴛ .
>ᴠᴀʀɪᴀʙʟᴇ ᴄᴏsᴛ ᴀʀᴇ ᴢᴇʀᴏ ᴡʜᴇɴ ᴏᴜᴛᴘᴜᴛ ɪs ᴢᴇʀᴏ.
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