Variable Cost is like the things that you need in order to produce an item in whole. For example I want to produce a MacBook Pro. The variable costs would be what would be needed in order to make this MacBook. We are talking Capital, material such as the aluminium for the frame, LED Screen etc. All these things that are needed to produce an item would be the variable cost.
examples of fixed cost factory are salary, rent, electricity bills while variable cost are purchase of raw materials,
Some of the Variable costs are Fuel Cost, energy, and operating cost
FixedRentWages and SalariesHeatingLightingMarketing/AdvertisementVariableEquipmentFurniture
Purchasing of motor vehicle is example of fixed cost while using fuel for running those motor vehicles is a variable cost.
There are variable and fixed costs. Businesses can manipulate the variable costs, but they cannot change their fixed costs in business.
A fixed cost is a cost (in the short-run) that does not change based on the production output in a business; i.e. no matter how many products a company makes/sells, these costs do not change. Examples include rent, salaries, and insurance. A variable cost is a cost (in the short-run) that changes based on the amount of output in a business; i.e. the cost increases if the company makes/sells more products, and vice-versa. Examples include wages, cost of goods sold, and income tax. Under classical economic theory, all costs are variable in the long-run.
Overhead refers to the cost of a business in a particular period. Specifically, overhead points to fixed and indirect costs. They are non-labor costs. Non-labor costs are variable or fixed. Rent and salaries are examples of fixed costs. Advertising and supplies are variable costs.
A fixed cost is one an organization must pay whether or not it does any business. Rent is a fixed cost. Interest on a loan is a fixed cost. You either pay the interest on your loan or go bankrupt like General Motors. Other costs can be fixed or variable depending on the business. Inventory is variable. If sales are low, you keep a low inventory and do not keep much money tied up in stuff that is not selling. Labor can be a variable cost. With the right kind of business, you can have layoffs and when business picks up, hire more workers. Union contracts might make labor a fixed cost.
Direct labor and direct material is example of variable cost which increase with each increase of unit. Factory rent is example of fixed cost which remains fixed even in change in number of units produced.
Fixed cost and variable cost is equal to total cost as per following formula: Total Cost = Fixed Cost + Variable Cost
Advertising is a fixed cost. Many business allocate money to each quarter to cover their advertising cost for their company.
its a fixed cost