Fixed and Variable Costs
(Chapter 1 Discussion Question 9(a)) Controller, Judy Koch, in a recent speech said, “I rarely see a real variable cost or a truly fixed cost.” What did she mean? Include in your response an explanation of the difference in behavior of variable and fixed cost, including an example to illustrate your explanation. Your initial post should be 200 to 250 words.
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Variable costs are the costs that vary in the course of doing a business. These costs vary depending on the level of production achieved by a particular business. When the level of production is high, these costs go up and when the level of production decreases, they fall too. These include things like wages, commissions amongst others. Fixed costs, on the other hand are the costs incurred by a business but they do not vary as the level of production changes (Oliver, 1999). They include things like insurances, advertising costs, rent among others…
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