Concept explainers
Fixed Cost: It is a cost which is constant in the short run, it is not related to any change in the production of goods or service, it will be fixed disregarding of increase or decrease in output.
Variable Cost: This cost is directly proportional to the level of output produced, it increase with increase in output and vice versa.
Mixed Cost: It contains some elements of fixed cost and some elements of variable cost. Therefore, mixed cost is the combination of both fixed cost and variable cost.
Cost Volume Profit Analysis (CVP Analysis): This analysis is helpful in determining that how any type of change in cost determines company’s income.
To explain: Classification of mixed cost under CVP analysis.
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