Question

Fixed overheads and variable overheads

17 Aug 2023
Answer :
Word Count : 541
Aspect Fixed Overheads Variable Overheads
Nature of Costs

- Fixed overheads are costs that remain constant regardless of production levels or activity.

- They are often associated with maintaining the production environment and infrastructure.

- Variable overheads are costs that change in direct proportion to changes in production or activity.

- These costs are directly linked to the volume of production.

Behavior with Production Changes

- Fixed overheads do not change significantly with variations in production.

- They remain stable even if production increases or decreases.

- Variable overheads fluctuate with changes in production levels.

- They increase as production increases and decrease as production decreases.

Examples

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