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.
Following those classifications, ME is a fixed cost, NME is a variable cost.
GMNA's annual fixed costs from 2002 through 2008 ranged from $29 billion to $40 billion.
If we assume a long-run fixed cost of 10, say legal fees that do not vary by output but are avoidable each period of production, the LRTC and SRTCs will change.
A rate design with a low customer charge and with a significant portion of fixed cost and margins recovered through the energy charge would result in revenue that was insufficient to support the investment necessary to serve loads such as vacation homes, barns, stock tanks, electric fences, and hunting cabins.
Because variable costs are so sensitive to changes in performance, they typically receive more attention than fixed costs and are monitored more closely.
In the figure we use the notation "AV" to refer to average choice, while "FC1" through "FC4" correspond to the fixed cost levels in Table I.
As previously noted, 60 percent ($6,000) represents fixed costs and 40 percent ($4,000) represents variable costs.
Total Fixed Costs I-[Average Variable Cost Per Unit Sold] Average Revenue Per Unit Sold
When the fixed costs and the variable costs per unit are known, an analysis can be made of total cost based on the number of units produced.
Finnish metals and technology company Outokumpu Group said on Wednesday (4 January) that it had completed personnel negotiations that were part of the company's fixed cost reduction programme.
So, while gas is not a fixed cost, it should be treated as such for this analysis because it's more fixed than variable in nature.