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Investorwords.com is an extensive dictionary of financial terms that I will use to provide definitions for the various terms discussed in this paper followed by examples of each.
Every business has fixed costs. These costs normally remain and do not vary month-to-month. A few examples of fixed costs are rent, insurance, property taxes, leased equipment etc. Fixed costs, however, are fixed for a certain period of time. Eventually, fixed costs become variable (allbusiness.com) because leases costs may increase or taxes may decrease over time, for example.
Variable costs are costs that change according to the change in the volume of production units (investorwords...
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