8 Difference Between Fixed And Variable Cost

1. The cost which remains same, regardless of the volume produced, is known as fixed cost. 2. Fixed cost is a time related while variable cost is a volume related. 3. Variable costs are those that change with an increase or decrease in business activity.  4. Fix cost remains the same even if no goods or services are produced. 5. The units produced increases, fixed cost per unit decreases and vice versa. Variable cost remains same, per unit. 6. Fixed cost is combination of fixed production overhead, fixed administration overhead and fixed selling and distribution overhead. 7. Variable cost is combination of direct material, direct labor, direct expenses, variable production overhead, variable selling and distribution overhead. 8. Examples Fixed Cost: Depreciation, Rent, Salary, Insurance, Tax etc. Variable Cost Material Consumed, Wages, Commission on Sales, Packing Expenses, etc.