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Chapter 4
3.2 Fixed cost
A fixed cost is a ‘cost incurred for an accounting period, that, within
certain output or turnover limits, tends to be unaffected by fluctuations
in the levels of activity (output or turnover)’.
Fixed costs can also be known as period costs.
Examples of fixed costs:
Rent
Management salaries
Insurance
Total Unit
cost $ cost $
Activity Activity
level level
ion
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