Capital requirements can be categorized into fixed and variable capital. Fixed capital refers to long-term investments in physical assets, such as machinery, buildings, and equipment, necessary for the production process. Variable capital, on the other hand, pertains to short-term investments in resources that fluctuate with production levels, such as raw materials and labor costs. Together, these components determine the total capital needed for a business to operate effectively.
Land,Labour,Physical Capital,Fixed Capital,Working Capital and Human Capital.
The relataionship of cost between the level of production is determine the fixed or variable cost if cost change with production level then it is variable cost otherwise fixed cost.
To determine the variable cost in a business scenario when given the fixed cost, you can subtract the fixed cost from the total cost. Variable costs are expenses that change based on the level of production or sales, while fixed costs remain constant regardless of production levels. By subtracting the fixed cost from the total cost, you can isolate the variable cost component.
variable cost ignore the increasing importance of fixed cost in order to determine thecost of production.on computing the cost of production we basing on variable cost because variable cost change as productivity change that we eliminate the fixed cost to determine cost of production.
Total cost is determined by adding fixed costs and variable costs together. fixed cost + variable cost = total cost
it is important to separate variable and fixed costs. Another reason it is important to separate these costs is because variable costs are used to determine the contribution margin, and the contribution margin is used to determine the break-even point.
Breakeven point cannot be find out until sales revenue or selling price is not provided only the fixed and variable cost is not enough.
VARIABLE. When this variable has a fixed number assigned to it and does not change, it is called a "fixed variable".
difference between fixed and variable inputs
fixed capital
Variable
Variable