4.1.2.2. Fixed cost

4.1.2.2. Fixed cost

It is the cost incurred on an item which does not vary with the level of output.

It consists of the following five components.

(i) Depreciation

(ii) Interest on capital and variable costs

(iii) Repairs and Maintenance

(iv) Taxes

(v) Insurance premium

The components are denoted as DIRTI - 5.

Last modified: Wednesday, 21 December 2011, 11:06 AM