Question

In long run fixed cost convert into variable costs explained​

Answer 1

Answer:

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Explanation:

Types of Costs

Variable costs change according to the quantity of goods produced; fixed costs are independent of the quantity of goods being produced.

LEARNING OBJECTIVES

Differentiate fixed costs and variable costs

KEY TAKEAWAYS

Key Points

Total cost is the sum of fixed and variable costs.

Variable costs change according to the quantity of a good or service being produced. The amount of materials and labor that is needed for to make a good increases in direct proportion to the number of goods produced. The cost “varies” according to production.

Fixed costs are independent of the quality of goods or services produced. Fixed costs (also referred to as overhead costs) tend to be time related costs including salaries or monthly rental fees.

Fixed costs are only short term and do change over time. The long run is sufficient time of all short-run inputs that are fixed to become variable.

Key Terms

fixed cost: Business expenses that are not dependent on the level of goods or services produced by the business.

variable cost: A cost that changes with the change in volume of activity of an organization.