Question

What are some common examples of fixed, variable, and mixed costs typically found on a company's financial statements?

Answer 1

Fixed costs are those costs which does not changes with the change in production. It means that the Cost per unit changes with the change in production but the Total cost remains constant. Some examples are : Depreciation and amortization, Insurance expense, Lease and Rental payments, Property taxes, Salaries.

Variable costs are those costs which changes with the change in production or it could be said that it's cost per unit remains fixed and the total cost changes with the change in no. of units produced. Some examples are: Direct material costs, Direct labor costs, Wages, Sales commissions.

Mixed costs are those cost which have the properties of both Fixed costs and variable costs, It means that some part of the costs are variable and some are Fixed. Generally High-low method is used to bifurcate the Fixed and variable part. Some examples are: Employee benefit expenses, Car rental expense, Legal fees, Audit fees.