Major differences between variable costs and fixed costs are as follows:
1.Meaning
Variable Cost: Costs which increase or decrease with the change in output or activity.
Fixed Cost: Costs which don not increase or decrease with the change in volume or activity.
2. Nature
Variable Cost: It is influenced by the volume of production.
Fixed Cost: It influenced by the passage of time.
3. Behavior
Variable Cost: There may be no variable cost in the absence of production or activity.
Fixed Cost: It is always positive even if the production is stopped.
4. Relation With Output
Variable Cost: It is directly related with the activity or production of the firm.
Fixed Cost: It is constant cost, so it does not have any relation with productivity of the firm.
5. Controlling
Variable Cost: It is controllable cost so it can be controlled by managerial decision.
Fixed Cost: Fixed costs cannot be controlled easily by managerial decisions.
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