ankit singh
Last Activity: 4 Years ago
Wages paid to the factory labour are costs that are directly proportional to the level of production. If zero output is being produced then these costs do not have to be incurred. These costs vary with the level of output produced. Therefore, they are classified as variable costs. Fixed costs are indirect costs and have to be paid irrespective of the level of production. Even if zero output is being produced these costs have to be incurred. These costs include rent of the factory and supervisor's salary which is usually negotiated well in advance and must be paid on a contractual basis even if output fluctuates from normal.
