# What is the Meaning of Fixed Expenses? Don't Guess, Know it HERE

Fixed expenses do not vary with the change in production; they remain constant. Read on to know its meaning in detail along with examples.

Neha B Deshpande

Last Updated: Feb 7, 2019

Examples of Fixed Costs

Factory/Office rent, deposits, machinery costs, depreciation, insurance, annual maintenance contract charges, salaries to office staff, etc., are all examples of fixed expenses. You can save your costs by controlling your variable costs. However, it is difficult to put a budgetary constraint on fixed costs, though they can be controlled, too.

**Total Costs = Fixed Cost + Variable Cost**

**Fixed Cost per unit = Total Fixed Cost /Â**

**Quantity Produced**

How to Calculate Fixed Costs

**Example**

To produce 1 unit of a product, the total cost incurred is 50,000, whereas to produce 2 units of a product, the total cost is 60,000. What is the fixed cost incurred?

**Solution**

Let 'x' represent total fixed cost, and 'y' represent the variable cost per unit. Thus, we form the following two equations on the basis of information furnished to us:

x + y = 50,000

x + 2y = 60,000

Solving the two equations, we get:

y = 10,000

Thus, x = 40,000

Fixed cost is 40,000 USD.