Fixed costs

Fixed and variable costs

The fixed costs (short fixed costs , and capacity costs , time-dependent costs or employment-independent costs are called) in Business Administration as a cost part of the total cost , which for a consideration of reference (typically employment ) in a particular accounting period remain constant.

General

These are, for example, depreciation on fixed assets or rental costs , insurance premiums or interest expenses . Since these fixed costs are incurred independently of the output volume (short-term), they cannot be allocated to the unit costs according to the cause . The opposite of the fixed costs are the variable costs . The proportion of variable and fixed costs is calculated through cost reversal. By definition, the total costs are composed of fixed costs and variable costs : ${\displaystyle G_{k}}$ ${\displaystyle K_{f}}$ ${\displaystyle K_{v}}$

${\displaystyle G_{k}=K_{f}+K_{v}}$.

The higher fails, the proportion of fixed costs in total costs, the more one speaks of high fixed costs or fixed costs-heavy companies whose earnings threshold is higher than for fixed costs less intensive enterprises. The goal must be the degression of fixed costs , because with increasing capacity utilization, the fixed costs are distributed over a larger output volume , and by exploiting the law of mass production leads to company growth and results in economies of scale with corresponding economies of scale .

If the observation period is long enough, there are no fixed costs. For this reason, fixed costs are an ambiguous auxiliary construction in order to be able to estimate the costs actually caused by production, which are unknown in advance, or during ongoing production.

Delimitation of the fixed costs

According to Günter Wöhe, the block of fixed costs can be broken down into the following parts:

• Fixed product costs are costs that are incurred for a specific product and are independent of the output volume. This can e.g. B. be the cost of a special tool that is only used to manufacture a specific product.
• Fixed product group costs are costs that are only incurred for products of a certain product group and are independent of the output volume. This can e.g. B. be costs for machines that are only used to manufacture this product group.
• Cost center-fixed costs are costs that arise within a cost center for several product groups and are independent of the output volume. This can e.g. B. be the cost of the premises.
• Area-fixed costs are costs that are only incurred for product groups that are grouped together within one area or division. This can e.g. B. Administrative costs.
• Fixed company costs are costs that cannot be assigned to a product, a group, a cost center, or an area or division. This can e.g. B. Contributions or general management costs.
• Mixed costs are costs that cannot be described as either purely fixed or purely variable. For the sake of simplicity, however, they are sometimes treated as fixed costs.

Fixed costs and unit costs

Possibilities to include the fixed costs in the unit costs (see also average costs ) of a product unit are

• Division of the fixed costs by the output quantity ( fixed cost proportionalization )
• Distribution according to the principle of averages
• Division into payload and capacity costs by the stress principle

If fixed costs are distributed over the output volume and full costs are calculated by adding the variable costs , then it must be noted that full costs are often not relevant for decision- making in the short term . If the output is reduced, for example, only the variable costs are omitted, but the fixed costs remain unchanged. A distribution of fixed costs over the output volume therefore harbors the risk of wrong decisions in companies: A company that decides on an additional order should accept this even if the full costs are not covered, but a contribution margin is made in addition to the variable costs for partial coverage which can redeem fixed costs.

Fixed costs and overheads

Fixed costs are often equated with overhead costs , but this is not always correct because of the different perspectives of the terms. Overhead costs are costs that cannot be directly assigned to a cost object. For example, the salary of an employee who only works for a specific cost unit, e.g. B. as a development engineer for a special product, is independent of the output quantity (= fixed), but at the same time only causes this one cost unit (= individual costs).

Jump fixed costs

Jump-fixed costs (also interval-fixed costs ) are costs that are constant within certain intervals, but rise or fall to a different level between these intervals (jump). In this case, the cost function assumes a stair-like course. This happens, for example, when the production capacity is no longer sufficient from a certain number of items to be produced, and new investments (e.g. new machines) or other expansions are made.

example

A machine causes fixed costs (e.g. depreciation and the like) of 500 euros. In 24 hours max. 30 parts can be produced. If the production volume is to be increased to 31 parts, another machine is required. The fixed costs jump from 500 to 1000 euros. As long as the production volume remains below 60 parts, no further machines need to be purchased.

The adjustment of capacity to a higher capacity utilization and thus causing additional fixed costs as described in the above example to the so-called fixed costs trap lead: If by expansion investment causes additional fixed cost, but this contrary to expectations, not additional revenue covered, thus lead the additional fixed costs lead to a deterioration in the result, possibly even to a loss situation.

Individual evidence

1. ↑ Jürgen Klauber / Bernt P Robra / Henner Schellschmidt (eds.), Hospital Report 2008/2009 , 2009, p. 5
2. ↑ Günter Wöhe / Ulrich Döring , Introduction to General Business Administration , 25th edition, 2013, p. 932