What is the meaning / definition of Fixed Costs in the industry?

Fixed Costs, abbreviated as FC, are costs which are invariable, meaning they relatively constant in value despite changes in production or sales rates. Fixed Costs, mixed costs and variable costs the total costs at any business. In the Fixed Costs make up a large percentage of total costs incurring, as require many expensive assets such as buildings, technology, and equipment. Successful Hotel Operators are able to reduce Fixed Costs, thereby profitability for businesses

Examples of Fixed Costs would be: rent, mortgage, salaries, insurance, taxes, utilities, land, building, internet, telephone plans, advertising cost, music entertainment, reservation expenses, newspaper subscriptions etc.

Fixed costs are typically found under operating expenses. The concept is used in financial analysis to find the break-even point of a business.

  • Formula: Fixed Costs = Total Costs – Variable Costs

See Also:

  • Variable Costs
  • Total Costs

Synonyms:

  • Invariable Costs

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