What is a firm direction?

Fixed overhead costs relate to a specific type or group of business expenditure. The word overhead cost in business is used to describe business costs or the amount of money that an individual or company must spend to operate and maintain functional business. Fixed means that specific costs do not change monthly.

Some business costs are variable or may change daily, monthly or quarterly. For example, inventory costs may change depending on how much a person needs a person. Work costs may also change if the company has to pay someone to work overtime when the sales volume increases.

On the other hand, the fixed costs do not change the no -volume with the sales volume. Fixed overhead costs remain the same whether the company sells one of the items or 1,000 items. Thus, the fixed overhead costs are predictable and generally remain the same for the least determined period of time, usually a year.

exIt is staggered by several different types of fixed directorial costs common in business. For example, rent is usually fixed overhead costs. Most businesses will sign rent for at least one year in office space or retail space. The rent remains the same for this amount of time and is not more than because the company sells more or less product or service.

Some other office expenses can also be fixed. The cost of paid managers can also be considered a fixed overhead cost unless managers are paid on the basis of a bonus structure or commission that is tied to sale. Interest of borrowed money, depreciation or reduced value on a building or equipment, and other such costs are also considered to be determined because they do not differ from month to month.

Fixed overhead costs do not necessarily remain stationary forever. They can change if rentall will increase rent or if the new manager is ED. However, this change will not come from increasing or reducing sales and as a result the costs will still be considered fixed costs.