Question

Distinguish between Fixed Cost and Variable Cost?

Answer 1

Fixed Cost	Variable Cost
1. Fixed cost does not change with the change in the quantity of output.	Variable cost vary with the level of output.
2. Fixed cost is also called as “Supplementary Cost” or “over head cost”.	Variable cost is also called as “ Prime cost” , “Special cost” or Direct cost.
3. For example: Watchman’s wages, Permanent worker’s Salary, machines Insurance Premium deposit for power Licence fee, etc.	For example: Temporary workers, cost of raw materials, fuel cost, electricity charges, etc.