Fixed and Variable Costs Essay Example | Topics and Well Written Essays - 500 words

Fixed and Variable Costs - Essay ExampleExamples of semi variable addresss involve electricity expense, telephone expense. In one broad category of Over head expenses, these costs atomic number 18 collectively shown for example depreciation of machinery as well as the heating and lighting cost. Electricity cost is a semi-variable cost because there is a unbending charge and then on any whole we use we are charged an additional amount. So this additional amount is the variable cost and the fixed charge is the fixed cost. Semi variable cost stays constant for a certain era period and then it goes to a higher cost at a specific increased tidy sum (Leslie 1993).For analysis purpose, the fixed part is separated from the variable part and both are written respectively so that proper analysis can be done and so the company should know as to how much is their fixed cost and how much is variable.2. A companys break-even point is its sales volume at which its check costs equal its tota l revenues. This means that at the break-even point, the company is making neither any emolument nor any loss. If a company is operating below its break-even point it would not be able to make it in the long run as its costs (fixed and variable) would not be covered by the revenues (Susan 2008) .