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Question: What is the difference between a variable cost and a fixed cost?
Sample Ans
Fixed costs do not vary with output, while variable costs do. i.e., variable costs increase with output but fixed costs broadly stay the same. Fixed costs are sometimes called overhead expenses.
variable costs on the other hand, fluctuate in direct proportion to changes in output. A variable cost is a company’s cost that is associated with the amount of goods or services it produces. a production facility, labor and material costs are usually variable costs that increase as the volume of production increases. It takes more labor and material to produce more output, so the cost of labor and material varies in direct proportion to the volume of output
he main difference between fixed cost and variable cost is that fixed cost is cost that remains fixed throughout the production period irrespective of the level of production e.g rent, salaries and wages. Variable cost are those costs that varies according to level of production. In case of low production, it will be low and vice versa.