What is the difference between total cost and fixed costs?

Along with variable costs, fixed costs make up one of the two components of total cost: total cost is equal to fixed costs plus variable costs. In accounting and economics, fixed costs, also known as indirect costs or overhead costs, are business expenses that are not dependent on the level of goods or services produced by the business.

Is a fixed cost a variable cost?

Since fixed costs are unrelated to a company’s production of goods or services, they are generally indirect costs. A fixed cost is one of two different types of business expenses that together produce total cost. The other is a variable cost. Fixed costs are expenses that aren't related to a company's operational activities.

What is a fixed cost?

A fixed cost is a business expense that normally doesn’t change with an increase or decrease in the number of goods and services produced or sold by the business. Fixed costs are commonly related to recurring expenses not directly related to production, such as rent, interest payments, insurance, depreciation, and property tax.