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Factor cost or national income by type of income is a measure of national income or output based on the cost of factors of production, instead of market prices. This allows the effect of any subsidy or indirect tax to be removed from the final measure. [1] The concept of factor cost is focusing on the cost incurred on the factor of production.
In economics, average fixed cost (AFC) is the fixed costs of production (FC) divided by the quantity (Q) of output produced. Fixed costs are those costs that must be incurred in fixed quantity regardless of the level of output produced. =. Average fixed cost is the fixed cost per unit of output.
Here’s an example. The ABC Company makes widgets. The company has fixed costs of $10,000 per month. Each widget costs the company $3.00 to make, and it sells each widget for $5.00.
Capital costs are fixed, one-time expenses incurred on the purchase of land, buildings, construction, and equipment used in the production of goods or in the rendering of services. In other words, it is the total cost needed to bring a project to a commercially operable status.
These costs are treated as an expense in the period the business recognizes income from sale of the goods. [5] Determining costs requires keeping records of goods or materials purchased and any discounts on such purchase. In addition, if the goods are modified, [6] the business must determine the costs incurred in modifying the goods. Such ...
Along with variable costs, fixed costs make up one of the two components of total cost: total cost is equal to fixed costs plus variable costs. In accounting and economics, fixed costs, also known as indirect costs or overhead costs, are business expenses that are not dependent on the level of goods or services produced by the business. They ...
The long-run marginal cost (LRMC) curve shows for each unit of output the added total cost incurred in the long run, that is, the conceptual period when all factors of production are variable. Stated otherwise, LRMC is the minimum increase in total cost associated with an increase of one unit of output when all inputs are variable.
Shutdown cost: Costs incurred if operations are shut down, and which would not occur if operations are continued. Capacity cost: The cost incurred by a company for providing production, administration and selling and distribution capabilities in order to perform various functions. These costs are normally fixed costs.