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Questions
Explain with an example, the meaning of fixed costs.
Explain fixed cost with suitable examples.
Answer in Brief
Solution
- Fixed costs are those costs that remain fixed in amount irrespective of changes in the volume of output during a given period of time.
- Such costs do not change with changes (increase or decrease) in the level of activity up to a certain limit.
- Rent, insurance, and the depreciation of plants are examples of fixed costs.
- Salaries for permanent staff are considered fixed costs.
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Classification of Costs
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