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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.

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