MANAGEMENT

Detailed explanation-1: -Fixed costs are expenses that do not change with the amount of output produced. This means that the costs remain unchanged even when there is zero production or when the business has reached its maximum production capacity.

Detailed explanation-2: -Costs are broadly classified into four types: fixed cost, variable cost, direct cost, and indirect cost.

Detailed explanation-3: -Key Takeaways Companies incur two types of production costs: variable and fixed costs. Variable costs change based on the amount of output produced. Variable costs may include labor, commissions, and raw materials. Fixed costs remain the same regardless of production output.

Detailed explanation-4: -Costs that remain constant or do not change with the level of output are called total fixed costs.

Detailed explanation-5: -The average fixed cost (AFC) is the fixed cost that does not change with the change in the number of goods and services produced by a company. To put it in a nutshell, the average fixed cost (AFC) is the fixed cost per unit and is calculated by dividing the total fixed cost by the output level.