What is a Fixed Cost?
- A fixed cost is a cost of production that is independent of the quantity produced.
How Do I Remember It?
- Think of fixed costs as “set in stone.” They are like the bills you have to pay each month, such as rent or insurance, which stay the same no matter how much you produce.
Real World Example
- For example, the rent for a manufacturing facility is a fixed cost. Whether the factory produces 100 units or 1,000 units, the rent remains the same.
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By: Ryan Aquino
