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Variable costs change based on the amount of output produced. Variable costs may include labor, commissions, and raw materials.
Fixed costs remain the same regardless of production output. Fixed costs may include lease and rental payments, insurance, and interest payments.
What are variable costs examples?
Variable costs are costs that change as the volume changes. Examples of variable costs are raw materials, piece-rate labor, production supplies, commissions, delivery costs, packaging supplies, and credit card fees. In some accounting statements, the Variable costs of production are called the “Cost of Goods Sold.”
What is fixed cost with example?
Examples of Fixed Costs
Fixed costs include any number of expenses, including rental lease payments, salaries, insurance, property taxes, interest expenses, depreciation, and potentially some utilities. For instance, someone who starts a new business would likely begin with fixed costs for rent and management salaries.
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