Comprehensive Cost Analysis and Decision-Making

📋 Course Outline

1. Fixed Costs
2. Variable Costs
3. Sunk Costs
4. Opportunity Costs
5. Recurring Costs
6. Non-Recurring Costs
7. Direct Costs
8. Indirect Costs
9. Cash Costs
10. Book Costs
11. Life Cycle Cost

📖 1. Fixed Costs

🔑 Key Concepts & Definitions

• Fixed costs are expenses that remain constant regardless of the level of production or sales volume, meaning they do not change with output fluctuations. (Dr. Nigar Zehra): "Fixed costs are expenses that remain constant, regardless of the level of production or sales volume."
• Examples of fixed costs include rent, property taxes, salaries of permanent employees, insurance premiums, and loan repayments. These costs are paid irrespective of the business activity or revenue generated. (Dr. Nigar Zehra)
• Fixed costs do not vary with output changes and remain constant over a wide range of activities, providing stability in cost structure. (Dr. Nigar Zehra)
• Fixed costs are paid regardless of whether the business is active or inactive, making them unavoidable expenses in the short term. (Dr. Nigar Zehra)
• In the short run, fixed costs are constant; however, in the long run, all costs can become variable as firms can adjust their fixed cost components. (Dr. Nigar Zehra)

📝 Essential Points