Let's take a look at these costs one at a time. First, let's look at fixed costs. They are just like they sound  fixed  they don't change when volume goes up and down. So if we manufactured loaves of bread and we made more loaves of bread than normal, there are some costs that wouldn't change even if we made a lot more than normal. For example, our building insurance wouldn't change. Our depreciation on our equipment wouldn't change.

 

Using the simple bread manufacturing example, what other fixed costs can you think of?