Question

Give one example each of a variable cost and a fixed cost, either from your work experience or your personal expenses. Use 1 examples for a variable cost too.

Answer 1

Variable cost is the cost which keeps changing due to change in the level of output.

Example of Variable cost in a manufacturing company :

--- Direct material cost

--- Direct labor cost

--- Factory utilities

On the other hand, Fixed cost is the cost which does not change with in the relevant range of output.

Example of fixed cost in a manufacturing company :

--- Factory rent

--- Factory supervisor's salary

--- Factory insurance expense

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