Fixed Cost - Sales Glossary - Upnify
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Fixed Cost


A periodic cost that remains more or less the same regardless of the level of production or sales revenue, such as depreciation, insurance, interest, rent, and wages.


While all costs vary over time and none remain purely fixed, the concept of fixed costs is necessary in short-term cost accounting.


These costs are not sensitive to small changes in the company's activity; they remain unchanged in the face of such changes. Operating leverage is based on transferring variable costs to fixed costs.