Fixed costs remain for a business even where no output is produced. Examples here are costs required to keep the business operational such as a factory or the wages of office staff.
Variable costs are costs that increase as output increases, examples being costs that are directly related to the output being produced.
This shows a diagram showing how the costs move as output changes.
Return to Management Accounting Questions and Answers here.
To learn more, access the right low cost introductory accounting tutorial here