Fixed cost

lastmod 2025-08-26created 2025-08-264 edits

Fixed costs are costs that do not change even when the volume of products or services produced changes. These costs arise independently of the company's business environment. Fixed costs are used in break-even analysis to ensure profitability when deciding prices and sales/production volumes.

Categories

• Korean: 변동비 (Variable cost)
• Korean: 고정비 (Fixed cost)

Examples of fixed costs

• Depreciation – the cost of reducing the original acquisition cost of land, buildings, and machinery and equipment over their useful life
• Insurance premiums – premiums paid under an insurance contract
• Rent – periodic expenditure for leasing land/buildings
• Salaries/wages – fixed amounts paid to workers regardless of hours worked
• Fixed operating costs – costs of electricity, water, gas, etc. essential for running the business

See also

• Korean: 회계
• Korean: 한계이익 (Marginal profit)
• Korean: 공헌이익 (Contribution margin)

Favorite site

• If you run a small company, managing fixed and variable costs is a must! - Granter - Manage your company's funds easily with AI
• Variable costs vs. fixed costs (Variable Costs (VC) vs. Fixed Costs (FC)) : Naver Blog
• The first step toward business growth: calculating the break-even point from financial statements - Spendit Blog