WHAT THE AMOUNT OF THE FIXED COST?
To determine the amount of fixed cost, you will need to gather some financial information about a specific business or activity. Fixed costs are expenses that do not change with the level of production or sales volume. They are incurred regardless of the level of output, such as rent, salaries, insurance, or equipment leasing fees.
Here's how you can find the amount of fixed costs:
1. Identify the relevant financial period: Determine the time frame for which you want to calculate the fixed costs, such as a month, quarter, or year.
2. Gather financial statements: Collect the income statement, also known as the profit and loss statement, for the desired period. This document summarizes a company's revenues, expenses, and net income.
3. Locate the total costs: Look for a category or line item that shows the total costs incurred during the specific period. This should typically be towards the bottom of the income statement.
4. Deduct variable costs: Exclude any expenses that vary with the level of production, such as raw materials, direct labor costs, or commissions. These costs are not fixed and should not be included in determining the fixed costs.
5. Calculate the fixed costs: Take the total costs and subtract the variable costs. The remaining amount will represent the fixed costs for the given period.
Remember, fixed costs may vary from period to period, so be sure to update your calculations regularly if you need the most recent data.