The Fixed Overhead In Cost Accounting.
Fixed overhead expenses are those expenses which remain fixed in total amount with increase or decrease in the volume of out put. Fixed cost per unit, decreases as production increases. This is also known as period cost as it is dependant on time rather than volume of out put.
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Example of fixed overheads are:
- Rent of building.
- Depreciation of building.
- Interest on capital.
- Salary and allowances paid to managers etc.
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Fixed overhead costs are not always in nature. It may change if the capacity of plant changes.