📣 Fixed cost, fixed cost that SME businesses need to know

To start investing in business for businesses that want to expand their business Must know the funds that will be used for working capital for investment. including rent for storage space production order employee salary Each year, the business will have different profits. The fixed cost calculation will help to make planning and management of the business doubly easier. Now, many people may be wondering what fixed cost is. Today we will explain in this article.

📌What is fixed cost?

Fixed cost is a fixed cost that does not change, does not increase, does not decrease in accordance with the volume of production of goods and services of the business owner. It is a fixed cost that must be incurred even if there is little production or how much product is produced. Most of the costs in this part are fixed costs from the rental of commercial buildings or factories, internet fees, fixed expenses for use as a business place. No matter how much the business owner produces or stocks But still have to pay rent at the same price.

In addition to fixed costs, there are also types of costs called variable costs that vary according to the volume of production or sale of goods. The cost will increase or decrease depending on the total production volume.

Cost is the value of an entity's resources that are wasted in obtaining goods or services. to be used to generate income in the future The lost value must be measurable in monetary units. or a decrease in assets such as cash, or an increase in liabilities such as accounts payable or loans. Costs can be divided into two main categories:

1. Fixed cost

2. Variable cost

📌 What are fixed costs or fixed costs?

Fixed cost or fixed cost that must be paid throughout the business There is not just one type. but can be further divided into two types as follows:

👉🏻Committed Fixed Cost is a long-term cost that will not change or adjust in a short time, such as rental of machinery. Location rental, warehouse rental fees, etc.

Short-term fixed costs are fixed costs that occur over a certain period of time. For example, short-term fixed costs, such as fixed costs caused by management decisions from time to time, such as advertising costs. research and research expenses

from the comparison between short-term fixed costs and long-term fixed costs can be seen that even a fixed cost But fixed costs do not vary only for a certain period of the entity's activities.

for example Although the depreciation of the business is a fixed cost in the long run. If the business has increased production buy more machines This will increase the depreciation cost of the entity, meaning that the new fixed costs have gone out of the range of the firm's predecessor.

📌 cost and expenses Is it different?

cost definition And the expenses (Expense) of the business are almost the same thing. But the difference is that the cost is a kind of cost that has been fully utilized. or a cost that has already generated revenue

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