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Essay text:
To the lay person these various costs may be confusing, but once explained are helpful in knowing how the company must allocate and account for all the costs listed.
Fixed Costs
Fixed costs are the costs that all companies must pay regardless of sales or production levels. Building payments, depreciation and taxes are just a few of the fixed costs that are common to all companies. It is easy to see why the term fixed cost is used. The costs are unmovable and must be paid each month or year without exception
Variable Costs
Opposite of fixed costs are variable costs. Variable costs fluctuate with the rate of business being performed...
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