Fixed costs

These do not alter with output

Examples – rent, management salaries, rates

Graphically fixed costs will always be illustrated by a horizontal line

As output changes fixed costs stay the same

Variable costs

Alter directly with the business’s level of output

Examples – fuel, raw materials

Graphically variable costs will always be a diagonal line from the origin

As output changes variable alter directly

Total costs

These are fixed and variable costs added together

Semi variable

These have a fixed and a variable element