fixed cost

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Fixed cost

A cost that is fixed in total for a given period of time and for given production levels.
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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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

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.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.
References in periodicals archive ?
The fixed cost per unit is simply the total fixed costs divided by the number of units sold.
Crop enterprise budget with addition of precision farming technology Returns: (price/yield/acreage) Yield Price Acres Total Returns Variable Costs: Data costs (Grid sampling, mapping, remote sensing) Fertilizer/lime material costs Fertilizer/lime application fees Pesticide material costs Pesticide application fees Total Variable Costs Fixed costs: Depreciation Interest on Investment Development of management human capital Total Fixed costs Profit Returns: (price/yield/acreage) Constant, increase or decrease Constant or increasing Constant or decrease Total Returns ???
break-even point = total fixed costs / camper contribution.
In order to make individual product CVP analysis relevant, as much of the total fixed costs as possible must be traced to the individual product lines.
After making your calculations, divide the total fixed costs by your average contribution margin per unit to determine your break-even point.
Now we can calculate the total contribution margin income (loss) by subtracting the total fixed costs from the total contribution margin.
Finally, we must assume that we're staying within the "relevant range" (the range of production where total fixed costs and variable costs per unit remain constant) and that the time value of money isn't material.
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.
A straight horizontal line depicts total fixed costs.
Costs -5 Logistic Costs -4 Administration Costs -5 Sales & Marketing -10 Unabsorbed Costs -2 Total Fixed Costs -31 -31% Net Result Before Tax 6 6%

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