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 ?
If fixed expenses do not change, then for every $1.00 increase in total revenue, net income will increase by 40 cents.
The increased time in the office will not raise fixed expenses.
Since there is no change in fixed expenses, net income also will increase by the same amount as the contribution margin, $14,375.
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.
Based on the complete sample of private sector respondents, fixed expenses, notably property taxes and insurance, constitute the largest source of expenses in 1988.
Fixed expenses, notably property taxes and insurance, constituted the largest portion of expenses in 1992 (32 percent).
You've estimated that your total fixed expenses for the year will be $200,000 (including rent, insurance and administrative salaries).
* Fixed expenses: Costs that remain constant regardless of sales.
Company A's annual fixed operating costs, including administrative salaries, office rent, utilities, travel, professional and other fixed expenses, are $425,000.
The continued rise, however, in fixed expenses has eliminated gains in estimated net operating income.

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