Are wages fixed costs or variable costs?

Wages paid to workers for their regular hours are a fixed cost. Any extra time they spend on the job is a variable cost.

Is wage rate a variable cost?

Hourly Wages Can Be Fixed or Variable Costs When you pay only for the number of hours worked on an as-needed basis – which is usually the case when hiring temporary or contract laborers or piece-workers – then it is considered a variable cost.

Is direct labor cost variable or fixed?

All costs that do not fluctuate directly with production volume are fixed costs. Fixed costs include various indirect costs and fixed manufacturing overhead costs. Variable costs include direct labor, direct materials, and variable overhead.

What is an example of a variable cost?

Examples of variable costs may include labor, commissions, packaging, and raw materials for production. Companies may have what is called semi-variable costs, which are a mixture of both variable and fixed costs.

What is an example of a fixed cost?

Examples of Fixed Expenses Fixed expenses can include essential expenses, such as those needed to maintain a basic standard of living each month. Some of the most common fixed expense samples include: Rent or mortgage payments. Renter’s insurance or homeowner’s insurance.

What are fixed costs examples?

What Are Some Examples of Fixed Costs? Common examples of fixed costs include rental lease or mortgage payments, salaries, insurance payments, property taxes, interest expenses, depreciation, and some utilities.

What are variable cost examples?

What are Examples of Variable Costs?

• Direct materials. The most purely variable cost of all, these are the raw materials that go into a product.
• Piece rate labor.
• Production supplies.
• Billable staff wages.
• Commissions.
• Credit card fees.
• Freight out.

What are fixed and variable costs examples?

Examples of fixed costs are rent, insurance, depreciation, salaries, and utilities. Examples of variable expenses are direct materials, sales commissions, and credit card fees.

Is hourly rate labor a fixed or variable cost?

It is a variable cost. Hourly rate labor may be fixed or variable depending on the circumstances. If the worker is paid an hourly wage but is contractually guaranteed a fixed number of hours each week, and is paid for the fixed number of hours irrespective of his actual working hours, then the worker is effectively a pseudo-salaried worker.

Is employee pay a fixed or variable expense?

Employees who work per hour, and whose hours change according to business needs, are a variable expense. Piecework labor, where pay is based on the number of items made, is variable – so are sales commissions. If you must have a minimum number of employees to keep the sales office or the production line running, their pay may be a fixed cost.

Is a salary a fixed cost?

If you pay an employee a salary that isn’t dependent on the hours worked, that’s a fixed cost. Other types of compensation, such as piecework or commissions are variable.

What is the difference between fixed and variable costs?

Labor costs that would need to be paid such as management salaries are fixed costs. Labor costs that would not need to be paid such as commissions, piece workers, hourly rates and overtime wages are variable costs.