1. What is the difference between fixed, variable, and periodic costs?

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Business

Uriah

13 December, 18:22

1. What is the difference between fixed, variable, and periodic costs?

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Damian Parrish · Answer 1

The difference is in how they response to the level of production of the firm.

Variable cost are directly associated with the production level, therefore changes with the number of units produced.

Fixed costs do not change with the level of production and remains fixed. Usually, fixed cost changes with the time.

Periodic Costs are the costs that cannot be capitalised and are incurred for a period of time. Such as administrative costs.