ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -If a company bills out the time of its employees, and those employees are only paid if they work billable hours, then this is a variable cost. However, if they are paid salaries (where they are paid no matter how many hours they work), then this is a fixed cost.

Detailed explanation-2: -Salaries. This is a fixed compensation amount paid to employees, irrespective of their hours worked.

Detailed explanation-3: -What is fixed vs. variable labor? In basic business terms, fixed costs are costs that don’t vary in relation to sales, such as rent or insurance premiums. Variable costs are directly related to sales, like cost of goods sold.

Detailed explanation-4: -Fixed costs remain the same throughout a specific period. Variable costs can increase or decrease based on the output of the business. Examples of fixed costs include rent, taxes, and insurance. Examples of variable costs include credit card fees, direct labor, and commission.