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How can we treat 580 as fixed cost if it is chaanging with output
Answers (7)
Sriram Somayajula Admin
Fixed cost is not changing. Total cost is changing and fixed cost per unit is changing when we increase number of units
Fixed cost wont change with no of units
Thread Starter
Prasanth kumar KamisettyFixed cost wont change with no of units
Yes but per unit fixed cost will change. Eg: rent - lets say 5 friends are staying in a room for Rs.20K - fixed cost is 20 K so share of rent per friend rent is 4K. ( 20K / 5 friends) If 1 friend no longer stays and moves out the total fixed cost does not change from 20K but per friend fixed cost increases from 4K to 5K ( 20K / 4 friends)
Thread Starter
Prasanth kumar KamisettyThis is average fixed cost
Average fixed costs = total fixed costs/ no of units.
CA Suraj Lakhotia Admin
Average fixed costs = total fixed costs/ no of units.
I'm saying the same thing that the example sir gave is about average fixed costs