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reasons why overheads are fixed costs or have a large fixed cost elements

Asked by: amina kassim 550 days ago - 1 Answers - 1431 views

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Just take a look at the items included in Overheads, e.g. Rent, Salaries, Leasing Payments, etc. These are all kind of expenses which are relatively fix, as they normally only change from time to time.

Salaries for example are only changing once a year. Rent may change based on the contract. All these expenses have in common that they are not dependend on the Volume of Goods Sold or Produced.

As soon as you take a view to a Services Business, you will see that Salaries might become a variable cost, as this cost may increase/decrease by the Volume of rendered Services.

Answer by abenetis 504 days ago

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