Fixed and variable costs
¡Supera tus tareas y exámenes ahora con Quizwiz!
Total costs
are fixed and variable costs added together
Average costs
are total costs of production divided by the level of production or output to give the cost to give the cost of producing a single unit of output
Fixed costs
Fixed costs do not change when the business changes its level of output e.g. rent, rates and salaries.
Variable costs
Variable costs change with the business's level of output e.g. fuel costs, wages, raw materials and components.