What Is Fixed Cost? Check Out The Definition And Examples In The Company

When a business makes a product or provides a service, there are a variety of inputs that go into it. The business has to pay for these inputs and the money spent is known as costs.

In the business world, costs are one of the most important things in accounting, both in management and cost accounting. However, in these costs, the costs have a goal that can be obtained, which can be used as a process of planning, controlling, and as material for making a decision.

In the concept of cost can be defined as the equivalent value of cash sacrificed as a means to obtain a good or service, and costs are also expected to provide a benefit at this time or in the future for the organization.

The fixed cost is defined as a cost that does not change in total as business activity increases or decreases.

However, in achieving targets such as the quality of the products made or any equipment used in the production process, fixed costs and variable costs are needed in carrying out these activities. To know more clearly about fixed costs, the following will be discussed about fixed costs:

Definition of Fixed Costs (Fixed Costs)

In an accounting basis, Fixed Costs are a type of cost that is static (does not change). This cost will always be incurred even if you do not do any activities or even when you do very many activities.

When in the production process, or vice versa when not in production, you will pay fixed costs or spend without calculating how much production you do.

But when these costs are equated with the amount of production, the two will produce a different idea. Judging from the resulting production, if the resulting production is high, of course the costs will decrease and vice versa.

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