Question

State two examples each of fixed cost and variable cost.

Hint:

Fixed costs = constant; Variable costs = change with output.

Answer 1

Step 1: Meaning of costs.
- Fixed cost: These costs remain constant irrespective of the level of output.
- Variable cost: These costs change in proportion to the level of production.
Step 2: Examples of fixed cost.
1. Rent of factory building.
2. Salary of permanent employees.
Step 3: Examples of variable cost.
1. Raw material cost.
2. Wages paid to daily labor depending on hours worked.
Step 4: Conclusion.
Fixed costs remain constant, while variable costs vary directly with production volume.