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Distinguish between fixed cost and variable cost.

Answer»

Difference between fixed cost and variable cost.

Sl. No.Fixed CostVariable Cost
iThe amount of money spent on fixed factors of production is called fixed cost. The amount of money spent on variable factors of production is called variable cost.
iiFixed cost does not change with change in level of output.Variable cost changes with change in the level of output.
iiFixed cost can never be zero even when production is stopped.Variable cost is zero when production is stopped
ivE.g.:- Rent of building, salaries of permanent employees etc.E.g.:-Cost of raw material, wages of temporary labour etc.



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