fixed cost


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Related to fixed cost: Direct cost, Average fixed cost, Sunk cost

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 ?
This is one fixed cost that declines every month, so the "cost" is not technically fixed, but close to it.
An avoidable fixed cost of $4 representing the imputed costs associated with the factory and equipment.
Using both press releases and annual reports, we were able to estimate the dollar value of fixed costs for GMNA to be between $40 billion and $29 billion (see Table 1).
Following those classifications, ME is a fixed cost, NME is a variable cost.
The first hypothesis we wish to analyze is that there is no difference between behavior in the four sessions with low fixed costs and the two sessions with high fixed cost.
The two identified savings would reduce fixed costs by 140 [pounds sterling] to 1,260 [pounds sterling] and increase the contribution per unit by 0.
Dran (1991) and Long (1992) provided the economics literature a theoretical treatment that demonstrated how proximity to breakeven output influences DOL, independent of the level of operating fixed cost.
A large part of economic size is covering the fixed costs associated with producing the services.
The decoupling mechanism is a three-year pilot program which will allow Avista to separate in the rate structure its fixed costs from the costs of purchasing natural gas to serve customers and to recover a portion of its fixed costs not recovered because of reduced energy usage by customers.
Total costs (TC) are made up of variable costs (VC), which are incurred each time you perform a service (a tongue blade is a variable cost when working up a sore throat), and fixed costs (FC), which are incurred whether you perform any particular service or not (office rent).
This means that for every dollar of new business, 35%would be allocated to covering fixed costs.
Domestic company-owned restaurants should see modest margin improvement, as lower food costs (primarily cheese) and the fixed cost leverage of higher sales volumes are expected to be partially offset by higher labor rates and the impact of a greater number of new unit openings in 2007 with their associated pre-opening expenses and time required for sales to ramp up to market averages.