Variable and Fixed Costs

e_naicegulevu · #1 Oct 23, 2007, 09:54 PM

Explain why it is important to differentiate between variable costs and fixed costs in cost volume profit analysis?

charlotte234s · Oct 23, 2007, 10:00 PM

Fixed costs don't change, but variable costs may change, creating less or more profit in the long run.

Fixed costs, basically, you can count on having to pay the same amount.

Variable costs, as they can change, will cause you to have to pay more (boo) causing loss of profits, or pay less (yay) letting you keep more profit.



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