Fixed costs

Costs that do not change with a specified activity level over a stated time period and relevant operating range. A lease or salary can behave as fixed within those assumptions without remaining fixed forever.

Fixed costs in round numbers

Hypothetical: factory rent and specified administrative salaries total US$8,000 per month across an assumed production-capacity range. Outside that range, or when leases and staffing change, the cost level may change.

Variable costs · Operating leverage · Contribution margin · All of the glossary