COST ACCOUNTING
FINANCIAL TERMINOLOGY
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]


Fixed Costs + Variable Costs


CostsRevenue


RevenueCosts


Fixed Costs + Variable CostsRevenue

Detailed explanation1: Total costs are composed of both total fixed costs and total variable costs. Total fixed costs are the sum of all consistent, nonvariable expenses a company must pay. For example, suppose a company leases office space for $10, 000 per month, rents machinery for $5, 000 per month, and has a $1, 000 monthly utility bill.
Detailed explanation2: Consequently, total cost is fixed cost (FC) plus variable cost (VC), or TC = FC + VC = Kr+Lw.
Detailed explanation3: Take your total cost of production and subtract your variable costs multiplied by the number of units you produced. This will give you your total fixed cost.
Detailed explanation4: Total cost – The sum of fixed cost and variable cost. Marginal costs – The extra (additional) cost of producing one more unit of output; equal to the change in total cost divided by the change in output (and, in the short run, to the change in total variable cost divided by the change in output).
Detailed explanation5: The first method works by using this simple formula: Fixed cost = Total cost of production(Variable cost per unit x number of units produced)