Understanding Fixed and Variable Costs (10th)

Front

Definition of Fixed Cost (FC)

Back

Fixed costs are those costs that do not change regardless of how much you produce or sell.

Front

Key Point about Fixed Costs

Back

You have to pay fixed costs even if you produce nothing.

Front

Fixed Costs Consistency

Back

Even if you produce 0 units or 1 million units, fixed costs remain the same.

Front

Examples of Variable Costs

Back

Raw materials, packaging or shipping costs, hourly wages for temporary workers, electricity or water bills.

Front

Variable Costs Behavior

Back

If you produce more, your variable costs go up. If you produce nothing, your variable costs are zero.

Front

Break-Even Point (BEP)

Back

The point where Total Revenue = Total Cost and Profit = $0 (No profit, no loss)

Front

Fixed Cost (FC)

Back

Costs that do not change (rent, salary, etc.)

Front

Profit Calculation

Back

Profit = Total Revenue - Total Cost

Front

Setting the Right Price

Back

Helps cover all costs and make a profit.

Front

Understanding Fixed Costs

Back

Essential for determining the minimum production level to avoid losses.