Fixed cost: Difference between revisions
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imported>Doug Williamson (Expand for variable costs.) |
imported>Doug Williamson (Mend link.) |
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Contrasted with a variable cost. | Contrasted with a variable cost. | ||
Variable costs are generally easier to change - especially to reduce - when necessary, compared with fixed costs. | |||
Therefore a lower-risk operational strategy is normally to have a lower proportion of fixed costs in the total cost structure, and a higher proportion of variable costs. | |||
This proportion is sometimes known as operational gearing. | |||
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* [[Break even point]] | * [[Break even point]] | ||
* [[Cost behaviour]] | * [[Cost behaviour]] | ||
* [[Direct costs]] | |||
* [[Expense]] | |||
* [[Flexible budgeting]] | * [[Flexible budgeting]] | ||
* [[Indirect costs]] | |||
* [[Management accounting]] | * [[Management accounting]] | ||
* [[Operational gearing]] | |||
* [[Opportunity cost]] | |||
* [[Overheads]] | |||
* [[Semi-fixed cost]] | * [[Semi-fixed cost]] | ||
* [[Semi-variable cost]] | * [[Semi-variable cost]] | ||
* [[Standard cost]] | * [[Standard cost]] | ||
* [[Sunk costs]] | |||
* [[Total cost]] | * [[Total cost]] | ||
* [[Variable cost]] | * [[Variable cost]] | ||
Latest revision as of 16:55, 10 August 2021
Cost and management accounting.
A fixed cost is a cost which stays the same regardless of the level of production or other activity.
Contrasted with a variable cost.
Variable costs are generally easier to change - especially to reduce - when necessary, compared with fixed costs.
Therefore a lower-risk operational strategy is normally to have a lower proportion of fixed costs in the total cost structure, and a higher proportion of variable costs.
This proportion is sometimes known as operational gearing.
