Okuzeka
Accounting & Tax vocabulary · Costs & Budgeting

Fixed cost

Meaning in accounting & tax, with examples

nounCore term

In accounting & tax, fixed cost means: A cost that stays the same in total whatever the level of production or sales, at least in the short term, such as rent, insurance or salaried staff.

In Turkish: sabit maliyet, sabit gider

How it is used

Used in cost accounting, budgeting and pricing. Spreading fixed costs over more units lowers the cost per unit, which is why volume matters in businesses with high fixed costs.

Example sentences

  1. Rent and insurance are fixed costs, so they don't change if we produce less.

  2. Our fixed costs are high, so we need volume to make money.

Common collocations

  • high fixed costs
  • cover fixed costs
  • fixed and variable costs
  • fixed cost base
  • variable costA cost that rises or falls in line with the volume of production or sales, such as raw materials, packaging or sales commissions.
  • overheadThe ongoing costs of running a business that cannot be linked directly to one product or service, such as rent, utilities, office staff and IT.
  • break-even pointThe level of sales at which total revenue exactly covers total costs, so the business makes neither a profit nor a loss.
  • budgetA financial plan that sets out expected income and spending for a future period, usually a year, and is used to control costs and compare actual results.

More terms: Costs & Budgeting

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This page explains English vocabulary for learners. It is not financial advice.