A:

A fixed cost is a cost that remains the same and does not depend on the amount of goods and services a company produces. It is an expense that a company has to pay and is usually time-related. For example, a fixed cost would be the rent a company pays on a monthly basis.

A variable cost, on the other hand, is a cost that varies as the amount of goods and services a company produces varies. A variable cost is dependent on a company's production volume. For example, suppose company ZYX pays $1 per unit of good sold; its cost would vary as the amount of goods produced varies.

Total costs are comprised of both total fixed costs and total variable costs. Given the total cost and total variable costs, one can find the total fixed costs of a company. One can find total fixed cost by subtracting total variable cost from a company's total cost.

Total fixed costs are the sum of all expenses that are constant that a company must pay. Unlike a fixed cost, which is just one expense, total fixed costs take into account all of the fixed costs a company may have.

For example, suppose a company rents office space for $10,000 a month, machinery for $5,000 a month and pays $1,000 for electricity a month. A fixed cost would be its rent payment, machinery payment or electricity payment. Total fixed cost, on the other hand, pools all of these fixed costs together. In this example, the total fixed cost per month is $16,000.

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