How to Calculate Fixed Cost

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Fixed costs are costs that do NOT vary with the number​ of goods or services produced. As a result, fixed costs remain constant within a relevant range. Although fixed cost can be relatively easy to predict, they represent a cost that must be paid regardless of whether or not the business generates any sales revenue. It is because of this that caution must be exercised prior to incurring fixed costs.

In addition to discussing the importance of fixed costs we'll also identify common fixed costs that a business incurs.

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