# fixed cost

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Related to Fixed Expense: Variable costs, Variable Expense

## Fixed cost

A cost that is fixed in total for a given period of time and for given production levels.

## Fixed Cost

An expense that does not change from time period to time period. For example, a company may rent a piece of property for \$4,000 per month. A company often prefers to have fixed costs because they reduce uncertainty, but this is not always possible.

## fixed cost

A cost that remains unchanged even with variations in output. An airline with 20 airplanes has the fixed costs of depreciation and interest (if the planes are partially financed with debt), regardless of the number of times the planes fly or the number of seats filled on each flight. Firms with high fixed costs tend to engage in price wars and cutthroat competition because extra revenues incur little extra expense. These firms tend to experience wide swings in profits. Compare variable cost.
References in periodicals archive ?
But what if we could change the equation and reduce our fixed expenses by \$10,000 a month?
Since there is no change in fixed expenses, net income also will increase by the same amount as the contribution margin, \$14,375.
If fixed expenses do not change, then you will need to see 857 new patients (\$30,000/\$35 per new patient) to achieve your target net profit.
The breakeven point is calculated as the ratio of the fixed expenses to the contribution margin ratio.
In our example where the contribution margin ratio was 40 percent, fixed expenses equaled \$30,000, then the breakeven point in revenue equaled \$30,000/0.
This is valuable, since if fixed expenses were to increase, you could easily calculate the additional revenue required to at least break-even from your investment.
Subtracting these traceable fixed expenses along with the variable expenses produces a more accurate individual contribution margin.
The common fixed expenses are subtracted from the total contribution margin since they will not change if an individual leaves the practice.
While fixed expenses are just that - fixed - fat can be trimmed from the discretionary category.
Fixed expenses and utilities expenses account for 50 percent of total operating plus fixed expenses.
Company A's annual fixed operating costs, including administrative salaries, office rent, utilities, travel, professional and other fixed expenses, are \$425,000.
Fixed expenses and utilities expenses account for over 50 percent of total operating cost, plus fixed expenses.

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