Total costs include the _ costs that change with how much production is done and the _ costs that are expenses a company has no matter what the level of sales is.

The total variable cost is the cost that changes with the level of activity (Production level) and the total fixed cost remains the same irrespective of the changes in the production level. So the total cost includes these two costs, one which changes with increase or decrease with the production level (Variable cost) and the other which does not changes with the level of activity (Fixed cost).

Example

Purchase a 50 ice-cream cups costs $40 to shopkeeper and the cost of electricity arising for ice-creams temperature management is $5 a month.

So if the shopkeeper buys 100 ice-creams or 60 ice-creams the cost will change as unit ice-cream costs $0.8 per unit. This means it costs shopkeeper $80 for 100 ice-cream cups (100*$0.8) and $48 for 60 ice-cream cups. This $0.8 is variable cost per unit and $80 or $48 are Total variable costs.

One thing you must note that the fixed cost remains the same. Whether it is 100 units or 60 units or 50 units the electricity cost that the refrigerator is generating is $5 a month. This $5 is Total fixed cost and it does not changes with the level of activity.

Total costs include the _____ costs that change with how much production is done and the _____ costs that are expenses a company has no matter what the level of sales is.

Answer :

Other Questions

Total costs include the _ costs that change with how much production is done and the _ costs that are expenses a company has no matter what the level of sales is.