ECONOMICS

Detailed explanation-1: -Fixed cost refers to the cost of a business expense that doesn’t change even with an increase or decrease in the number of goods and services produced or sold. Fixed costs are commonly related to recurring expenses not directly related to production, such as rent, interest payments, and insurance.

Detailed explanation-2: -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.

Detailed explanation-3: -Understanding the Different Cost Types. As the name suggests, fixed costs do not change as a company produces more or less products or provides more or fewer services. For example, rent paid for a building will be the same regardless of the number of widgets produced within that building.

Detailed explanation-4: -Fixed costs are costs that remain constant regardless of how much your company produces or sells. Examples of fixed costs include: Rent or mortgage payment. Property taxes.

Detailed explanation-5: -Unit cost is determined by combining the variable costs and fixed costs and dividing by the total number of units produced. For example, assume total fixed costs are $40, 000, variable costs are $20, 000, and you produced 30, 000 units.