Accounting Description:

What is fixed cost and variable cost?

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In general accounting, the costs that are incurred are those monies that are paid out by the business either; during the course of the business transactions or as a consequence of the transactions (Correia & Saldanha-da-Gama, 2014). The costs may be fixed or variable. Therein lays the distinction between the two forms of cost to an organization. Fixed costs do not change between the payment periods; regardless of the actual amount of commodities used. Variable costs are those that vary with the amount of commodity actually used by the enterprise between payment periods.

Fixed costs have the advantage of security of usage. This is necessary especially if the payments arising from the business are structured; unlike in variable costing. Fixed costs are …

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