Fixed Costs are those costs whose total does not change with the change in production level. However
Question:
Fixed Costs are those costs whose total does not change with the change in production level. However the per-unit cost of Fixed Costs changes with the change in production level. These costs are generally not considered while decision making.
Variable costs are those costs whose per-unit costs do not change with the change in production level but the Total of variable costs changes with the change in production level. These costs are always considered for decision making.
Fixed Costs example are Rent, Employee's Salary.
Variable Costs examples are Direct Materials and Direct labor.
YES, A company can budget for Variable Costs by only changing the Production level of the plant or equipment. Since the Variable cost per unit is fixed, only the change in production level will suffice for making a Budget.
Stats Data and Models
ISBN: 978-0321986498
4th edition
Authors: Richard D. De Veaux, Paul D. Velleman, David E. Bock