Fixed cost: Difference between revisions
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* [[Operational gearing]] | * [[Operational gearing]] | ||
* [[Opportunity cost]] | * [[Opportunity cost]] | ||
* [[ | * [[Overheads]] | ||
* [[Semi-fixed cost]] | * [[Semi-fixed cost]] | ||
* [[Semi-variable cost]] | * [[Semi-variable cost]] |
Latest revision as of 16:55, 10 August 2021
Cost and management accounting.
A fixed cost is a cost which stays the same regardless of the level of production or other activity.
Contrasted with a variable cost.
Variable costs are generally easier to change - especially to reduce - when necessary, compared with fixed costs.
Therefore a lower-risk operational strategy is normally to have a lower proportion of fixed costs in the total cost structure, and a higher proportion of variable costs.
This proportion is sometimes known as operational gearing.