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Cost & pricing
Fixed and variable costs
Variable costs move with volume (materials, transaction fees, commissions); fixed costs do not, within a range (rent, salaries, software). The split decides operating leverage.
Owned by: Entry analystTest band: Entry analyst
In practice
Few costs are purely either. Classify by what happens if volume doubles next month — and re-check yearly, because fixed costs step up.
The kind of thing the test asks
- Which cost is most clearly variable?
More in cost & pricing
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