Cost Accounting

Behavioural Costs

Fixed Costs

Fixed costs are costs that do not change when the level of production increases or decreases. Fixed costs remain the same for a period of time.  For example, rent is a fixed cost as it does not change if a manufacture's production increases.


Some other fixed costs could include:

  • Marketing/advertising fees

  • Insurance

  • Interests on loan

  • Depreciation on assets


Variable Costs

Variable costs are costs that change when the level of production increases or decreases. Variable costs change in line with a manufacturer's production. For example, wages is often a variable cost as if production increases, more labour hours is required to increase the volume of output.


Some other variable costs could include:

  • Electricity

  • Fuel costs

  • Water consumption


Mixed Costs

Mixed costs are costs that include both features of fixed and variable costs. For example, a telephone expense could charge a fixed line rental (fixed cost) and an additional cost based on the number of phone calls made (variable cost).

Some other mixed costs could include:

  • Payment Systems - often charge a monthly cost and then payment fees associated with each transaction​

Test Your Knowledge! 
Behavioural Costs Match Game

Match each cost to their respected behavioural cost classification. 


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