Financial modelling terms explained

Fixed Cost

The term fixed cost refers to a cost that does not change with an increase or decrease in the number of goods or services produced or sold. Fixed costs are expenses that have to be paid by a company, independent of any specific business activities.

What Are Fixed Costs?

Fixed costs are costs that do not change regardless of the level of production or sales achieved. They include items such as rent, insurance, and wages for salaried employees. In contrast, variable costs change with the level of production or sales achieved, such as the cost of raw materials or the wages paid to hourly employees. Fixed costs are important to consider when planning production levels, as they represent a minimum level of expenses that must be incurred in order to produce the good or service.

Get started today with Causal

Start building your own custom financial models, in minutes not days.