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The cost can be defined as an amount paid or required in payment for a purchase. The purpose of this memo is to identify and define the various terms used to describe cost. The terms that will be specifically addressed are fixed, variable, indirect, direct and sunk costs and a few more. There will also be examples provided to eliminate any confusion.
FIXED COSTS: The fixed cost is defined to be, cost that does not change in proportion to the activity of a business within range of productivity. An example of fixed cost would be the set amount that a person of sales would have to pay for utilities and property payments regardless of the amount of sales that is produced...
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