BACHELOR OF BUSINESS ADMINISTRATION

Detailed explanation-1: -Fixed costs are expenditures that do not change based on the level of production, at least not in the short term. Whether you produce a lot or a little, the fixed costs are the same. One example is the rent on a factory or a retail space.

Detailed explanation-2: -Fixed costs, sometimes referred to as overhead costs, are expenses that don’t change from month to month, regardless of the business’ sales or production volume. In other words, they are set expenses the company must pay, at least in the short term.

Detailed explanation-3: -No costs are fixed in the long run. A firm can build new factories and purchase new machinery, or it can close existing facilities. In planning for the long run, a firm can compare alternative production technologies or processes.

Detailed explanation-4: -Fixed costs (also referred to as overhead costs) tend to be time related costs including salaries or monthly rental fees. Fixed costs are only short term and do change over time. The long run is sufficient time of all short-run inputs that are fixed to become variable.

Detailed explanation-5: -Fixed costs do not vary with the production level. Total fixed costs remain the same, within the relevant range. However, the fixed cost per unit decreases as production increases, because the same fixed costs are spread over more units.