ECONOMICS

Detailed explanation-1: -Fixed cost is often called overhead. Variable costs are costs that change as the volume changes. Examples of variable costs are raw materials, piece-rate labor, production supplies, commissions, delivery costs, packaging supplies, and credit card fees.

Detailed explanation-2: -Fixed costs remain the same no matter how many units you produce or sell. Variable costs are directly tied to your sales and production. They fluctuate as your output increases and decreases. Mixed costs are a combination of your fixed and variable costs.

Detailed explanation-3: -For example, if a company’s monthly office space rent is $10, 000 and their monthly utilities bill is $500, then their total monthly cost would be $10, 500. In this case, the rent would be the fixed cost and the utilities would be the variable cost. Together they would make up the mixed cost.

Detailed explanation-4: -Example of Mixed Costs The annual expense of operating an automobile is a mixed cost. Some of the expenses are fixed because they do not change in total as the number of annual miles change. These include insurance, parking fees, and some depreciation.