Most businesses have both fixed costs and variable costs. Fixed costs remain the same regardless of the amount of product the company makes and sells. For the copy shop, for example, the mortgage on the building and the cost of insurance are fixed. Some, but not all, fixed costs are considered overhead (costs not directly associated with production or sales).
Fixed costs remain the same regardless of the amount of product the company makes and sells: the rent on office space, the cost of insurance, and the cost of managerial salaries are fixed. Variable costs change with the company’s production and sales volume. Variable ...