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distinction between fixed and variable costs

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1. Why do we make the distinction between fixed and variable costs and why does the time frame make a difference?

2. Is depreciation on a factory building a product cost or a period cost?

3. Is fuel consumption for a commercial airline a fixed or variable cost? Please answer and explain.

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A distinction between fixed and variable costs is highlighted.

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1. Why do we make the distinction between fixed and variable costs and why does the time frame make a difference?

As we know, fixed costs are the costs that do not change with the level of production within a certain time frame. On the other hand variable costs are the costs that vary with the volume of output such as raw material or labor hours in this time frame. Cost behavior may change with the time frame. For example in the short term, costs ...

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