Question

Difference between total fixed cost and total variable cost

Answer 1

A fixed cost is a cost that remains the same and does not depend on the amount of goods and services a company produces. It is an expense that a company has to pay and is usually time- related. For example, a fixed cost would be the rent a company pays on a monthly basis.

A variable cost, on the other hand, is a cost that varies as the amount of goods and services a company produces varies. A variable cost is dependent on a company's production volume. For example, suppose company ZYX pays $1 per unit of good sold; its cost would vary as the amount of goods produced varies.