What is the difference between fixed and variable costs?

Fixed costs are unchanging business costs like rent or insurance payments, which remain stable month after month, regardless of what the business produces. Variable costs are costs a business must pay, which change as production volume changes.

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.

What are fixed costs & why are they important?

Fixed costs are a type of expense or cost that remains unchanged with an increase or decrease in the volume of goods or services sold. They are often time-related, such as interest or rents paid per month, and are often referred to as overhead costs. They are important to attaining more profit per unit as a business produces more units.