VARIABLE AND FIXED COSTS IN COMPANY MANAGEMENT

                              Sorin Briciu, Professor PhD
                       „1 Decembrie 1918” University of Alba Iulia
                                  sbriciu@yahoo.com


ABSTRACT: The cost absorbs all the expenses of production for a company at a
certain level of the activity. For eliminating the influence of the fixed costs’s
absorbtion and for a better supervision of other causes of digressions, the managers
can apply the method of rational imputation of the fixed costs. The managers should,
in some cases, take into consideration the total costs and not the unit costs. Variable
costs, fixed costs and unit costs should be taken into consideration at all times. When
managers decide on the products to be manufactured, they have to know how the
income and expenses vary along with the changes in the production volume. That is
why they have to separate the fixed and the variable costs. The identification of a
variable or fixed cost helps the manager to forecast the total costs and to take the
decisions based on an existent situation.

Keywords: fixed costs, variable costs, the cost of the under-activity

JEL Codes: M 41