Total fixed costs are the sum of all consistent, non-variable expenses a company must pay. For example, suppose a company leases office space for $10,000 per month, it rents machinery for $5,000 per month and has a $1,000 monthly utility bill.
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In respect to this, what is the meaning of total cost?
Definition: The Total Cost is the actual cost incurred in the production of a given level of output. The total cost includes both the variable cost (that varies with the change in the total output) and the fixed cost (that remains fixed irrespective of the change in the total output).
Subsequently, question is, what are examples of variable costs? Here are a number of examples of variable costs, all in a production setting:
- Direct materials. The most purely variable cost of all, these are the raw materials that go into a product.
- Piece rate labor.
- Production supplies.
- Billable staff wages.
- Commissions.
- Credit card fees.
- Freight out.
Also Know, how do you find the total cost?
Add your fixed costs to your variable costs to get your total cost. Your total cost of living on your budget is the total amount of money you spent over a one month period. The formula for finding this is simply fixed costs + variable costs = total cost.
What is total production cost?
Production or product costs refer to the costs incurred by a business from manufacturing a product or providing a service. Production costs can include a variety of expenses, such as labor, raw materials, consumable manufacturing supplies, and general overhead.