Fixed costs


 

Fixed costs are those components of the total costs which stay constant in spite of changes in scale within a time period (for example, rent, interest paid, write-offs, etc). The opposite of fixed costs is variable costs. Determining which costs have to be viewed as variable or fixed depends on the time scale being examined, as well as the specific situation surrounding the decision. As a rule, the longer the period under examination is, the more variable are the costs. In the long-term, there are no fixed costs.

 

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