In producing a product, a firm has both fixed costs and variable costs. Fixed costs are costs that must be paid regardless of how many units are produced and sold. Variable costs, on the other hand, fluctuate directly with sales volume. The more you produce, the higher your variable costs. Let's try this out. Using your client's crystal soap business, indicate which costs are fixed and which are variable by dragging them onto the correct side of the ledger.
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Home » Business » In producing a product, a firm has both fixed costs and variable costs. Fixed costs are costs that must be paid regardless of how many units are produced and sold. Variable costs, on the other hand, fluctuate directly with sales volume.