Understanding Costs in Business Studies for G10

What are fixed costs?

• Fixed costs are expenses that remain constant regardless of production levels.

• Fixed costs are only applicable to variable expenses.

• Fixed costs vary with production levels.

• Fixed costs are expenses that change monthly.

Give an example of a fixed cost.

• Employee salaries and bonuses

• Office supplies

• Rent of an office space

• DEWA consumption in the office

What are variable costs?

• Costs that appear only at the beginning of production.

• Variable costs are costs that increase

  with production volume.

• Expenses that are fixed and do not change with output levels.

• Costs that remain constant regardless of production volume.

How do variable costs change with production?

• Variable costs decrease as production increases.

• Variable costs are unrelated to production levels.

• Variable costs remain constant regardless of production levels.

• Variable costs change in direct proportion to production levels.

Define total costs.

• Total costs = fixed costs + variable costs

• Total costs are the expenses incurred by a business without considering production.

• Total costs are only the variable costs of production.

• Total costs refer to the revenue generated from sales.

How do you calculate total costs?

• Total Costs = Fixed Costs + Variable Costs

• Total Costs = Fixed Costs - Variable Costs

• Total Costs = Fixed Costs * Variable Costs

• Total Costs = Fixed Costs / Variable Costs

What is the difference between fixed and variable costs?

• Fixed costs are only incurred when production is at maximum capacity.

• Fixed costs are always the same, while variable costs do.

• Fixed costs vary with production levels.

• Variable costs are always higher than fixed costs.

Why are fixed costs important for businesses?

• Fixed costs are only relevant for big companies.

• Fixed costs change with production levels.

• Fixed costs are very important to plan and to know if the business can be sucessful in the future

• Fixed costs are not important.

Can total costs be reduced? Why or why not?

• Total costs are always the same.

• Yes, total costs can decrease.

• Total costs can only increase over time.

• Total costs are fixed and cannot change.

What is this formula about?

• Fixed Costs

• Variable costs

• Profit

• Average cost