Fixed cost

A fixed cost is one which, within certain output or turnover limits, tends to be unaffected by fluctuations in the levels of activity (output or turnover). A good example would be the rent and rates charge for an office, or the employment costs of staff who provide services not directly related to production or output (e.g. the accounting department).

 

reference: Business Studies / Accounting. Accounts & Finance Glossary. Jim Riley BA(Hons) MBA FCA // tutor2u

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