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What is Fixed vs Variable Costs Explained about?

Fixed costs remain the same regardless of production levels, while variable costs change proportionately with production levels. Rent is a fixed cost as it does not change with production volume, while electricity, telephone, and labor costs are variable costs that increase with more units produced. The break-even point is the production volume at which total revenue equals total costs, with no profit or loss. It is calculated as total fixed costs divided by the contribution margin per unit.

Author

Calistus Fernando

Language

EN