ECONOMICS

Detailed explanation-1: -Fixed costs are costs that do not change when sales or production volumes increase or decrease. This is because they are not directly associated with manufacturing a product or delivering a service. As a result, fixed costs are considered to be indirect costs.

Detailed explanation-2: -The fixed costs are those that do not change no matter how many units are sold. The revenue is the price for which you’re selling the product minus the variable costs, like labor and materials. When determining a break-even point based on sales dollars: Divide the fixed costs by the contribution margin.

Detailed explanation-3: -Fixed cost = Total cost of production-(Variable cost per unit x number of units produced)

Detailed explanation-4: -Examples of fixed costs are rent and lease costs, salaries, utility bills, insurance, and loan repayments. Some kinds of taxes, like business licenses, are also fixed costs. Since you have to pay fixed costs regardless of how much you sell, you should be careful about adding fixed costs to your small business.