What are the three categories of costs?

According to its form, costs can be divided into three categories, namely fixed costs, variable costs and mixed costs.

1, fixed cost

FixedCost, also known as fixed cost, refers to the cost that the total cost can remain unchanged within a certain period of time and within a certain range of business volume, regardless of the increase or decrease of business volume.

Features:

The total cost does not change with the business volume and is a fixed amount; The fixed cost per unit of business (that is, the fixed cost per unit) is inversely proportional to the increase or decrease of business.

Scope:

The total amount of fixed costs is fixed only in a certain period and within a certain business scope, that is to say, the fixity of fixed costs is conditional. A certain range mentioned here is called the relevant range. If the business volume changes beyond this range, the fixed cost will change.

2. Variable cost

Variable costs refer to those costs whose total amount varies linearly with the change of business volume within the relevant range. According to the causes of variable costs, variable costs can be divided into two categories. One is technical variable cost, and the other is discretionary variable cost. Variable costs mainly include: raw materials that directly constitute product entities; Production workers' wages, electricity, fuel, etc.

Variable cost rate formula:

Variable cost rate = variable cost ÷ sales revenue × 100%= (unit variable cost× sales volume) ÷ (unit price× sales volume) × 100%= unit variable cost × 100%.

3. Mixed cost

According to the form of cost, that is, the dependence between total cost and specific business volume under certain conditions, costs can be divided into three categories: fixed cost, variable cost and mixed cost. Between fixed cost and variable cost, the part of the cost whose total amount is out of proportion with the change of business volume. The amount of mixed cost varies non-directly with the change of business volume.

In actual projects, such as maintenance costs and inspection costs, the cost model is not obvious, and these projects also change with the change of business volume, but not in proportion. There are two different costs, fixed costs and variable costs, which are called mixed costs for short.