# fixed cost

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Related to Total fixed cost: Total variable 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 ?
Once you have the weighted average contribution margin, the breakeven point is an easy calculation: simply divide total fixed costs (\$793,260 for Bob's) by the weighted average contribution margin.
After all, it can be accomplished with just three data elements: Actual or Projected Sales, Total Fixed Costs, and Total Variable Costs.
The desired amount of profit would be added to the numerator (total fixed costs) and would represent the additional number of units that would need to be sold at the current contribution margin to cover the desired amount.
Weekly Income Statement (Per Unit) Using Absorption Costing: 100 Units of P and 30 Units of Q Per Week Product Product Per Unit Amounts P Q Sales \$115.00 \$120.00 Raw Materials 45.00 40.00 Throughput \$70.00 \$80.00 Machine A \$12.00 [*] \$8.00 [*] Machine B 12.00 [*] 24.00 [*] Machine C 12.00 [*] 4.00 [*] Machine D 12.00 [*] 4.00 [*] Marketing/Distribution 22.85 [+] 23.84 [+] Total Fixed Costs \$70.85 \$63.84 Pre-Tax Profit (\$.85) \$16.16 (*.)Per Table 2 (+.)Allocation of \$3,000 of marketing and distribution costs based on dollar sales of each product in relation to total sales dollars.
[5,6] As shown in Figure 1, total costs, therefore, are the summations of the variable, fixed, and semivariable costs or the total variable and the total fixed costs.
If total fixed costs (e.g., the cost of owning the GPS, computer, mapping software, etc.) are equal for small and large farms, average (per acre) fixed costs are 10 times larger for the 100-acre farm than for the 1,000-acre farm.
Total fixed costs were \$258,304 and total variable costs were \$396,763.
10%) and multiply that portion by total fixed costs. Finally, divide the portion of fixed costs by the total units of production for the enterprise.
p = selling price per unit; v = variable cost per unit; Q = total quantity of units produced or sold; FC = total fixed costs.
Facilities will close and employee numbers will be reduced to decrease total fixed costs. New costing methodologies will be implemented.
1 GINGER LAKE CAMP 2 BUDGET ANALYSIS PRIOR BUDGETED 3 YEAR AMOUNT 4 NUMBER OF CAMPERS 100 100 5 6 TUITION REVENUE \$350,000 \$370,000 7 8 FIXED COSTS 9 Rent or depreciation & property tax 75,000 80,000 10 Staff salaries 65,000 70,000 11 Office expense & promotion 20,000 25,000 12 Fixed program costs 12,000 15,000 13 Other fixed costs 25,000 25,000 14 TOTAL FIXED COSTS 197,000 215,000 15 16 VARIABLE COSTS 17 Food 36,000 37,000 18 Counselors' salaries 45,000 50,000 19 Insurance premiums - variable 16,000 17,000 20 Supplies 15,000 16,000 21 Other variable costs 8,000 10,000 22 TOTAL VARIABLE COSTS 120,000 130,000 23 PRETAX OPERATING INCOME \$ 33,000 \$ 25,000 24 CAMPER CONTRIBUTION \$ 2,300 \$ 2,400 25 CAMPERS TO BREAK EVEN 86 90

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