2. Fixed cost refers to those costs
which do not vary directly with
the level of output.
Total Fixed Cost
FOR EXAMPLE
3. Total fixed costs do not
respond to changes in unit
level cost drivers within a
period.Total
fixed
costs
(Y)
Total activity (X)
0
0
Basic Cost Behavior Patterns
4. Variable cost refer to those cost
which vary directly with the
level of output
Total Variable Costs