Fixed cost

Are fixed costs per unit variable in nature? If yes, why?

Replies (2)
Fixed costs are those costs which are fixed in nature.


For example u rent a machine which is used for production and suppose the rent is Rs.50000. The maximum production capacity of that machine is 5000 units. So this Rs.50000 is fixed in nature.Assume in this particular year u produce only 2000 units. U dont pay lesser rent because u have produced lesser units. In next year ur production increases to 4500 units. Now also u pay the same Rs.50000.

So if u now calculate the cost per unit for both the years, u can understand the fixed cost per unit is variable.Fixed cost is not dependent on the quantum of production. Even if u dont produce the product u have to shell the fixed cost amount. Hence with higher production fixed costs gets reduced.
Fixed costs are Fixed in nature. Fixed costs remains constant as a whole, but they vary per unit, because fixed costs remains fixed at any level or volume of output being produced.Hence, larger output reduces fixed cost per unit.

For eg. If staff salary expenses per month is, say, Rs.10000.00 and your production during that month is, say, 1000 units.Now fixed cost per unit would be Rs.10(Rs.10000/1000 units).

Taking the same instance,if during the next month units produced is, say, 2000, now fixed cost per unit would be Rs.5(Rs.10000/2000 units).This is because at any level or quantum of production, fixed costs stay fixed.

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Company
ARTICLESHIP 30 September 2026
CA Article Assistant

CA Suraj Garg & Associates

New Delhi

CA Final

View Details
Company
16 October 2026
CA article trainee

Zerdi & Co. Chartered Accountants

Pune

CA Inter

View Details
Company
15 October 2026
Senior Accountant

Continental Belting Pvt Ltd

Mumbai

B.Com

View Details
Company
06 October 2026
Assistant Manager - Audit and Compliance

Ravi K Jain & Co

Noida

Others

View Details
Company
22 September 2026
Account Assistant

Chirag P Shah & Co. Chartered Accountant

Pune

B.Com

View Details
Company
ARTICLESHIP 07 October 2026
Article Trainee/ CMA Trainee

RMA And Associates LLP

New Delhi

CA Inter

View Details
Company
13 October 2026
Accountant

Zerdi & Co. Chartered Accountants

Pune

B.Com

View Details
Company
08 October 2026
Accounts and Tax Associate

POOJA R TELI & CO

Pune

CA Inter

View Details