1. What is Total Fixed Cost?

Total Fixed Cost (TFC) is the sum of all costs that do not change with the level of output or sales. These are expenses that must be paid regardless of business activity levels.

2. How Does the Calculator Work?

The calculator uses the simple summation formula:

Where:

• \( Cost_1, Cost_2, Cost_3 \) — Individual fixed cost items
• \( TFC \) — Total Fixed Cost

Explanation: Simply add up all fixed costs to determine your total fixed expenses.

3. Importance of Fixed Cost Calculation

Details: Knowing your fixed costs is essential for break-even analysis, pricing decisions, and financial planning. Fixed costs help determine the minimum revenue needed to cover expenses.

4. Using the Calculator

Tips: Enter all known fixed costs in dollars. You can add up to three costs in this calculator. For more costs, simply add the results to additional fixed costs manually.

5. Frequently Asked Questions (FAQ)

Q1: What are examples of fixed costs?
A: Common fixed costs include rent, salaries, insurance premiums, and equipment leases.

Q2: How is fixed cost different from variable cost?
A: Fixed costs remain constant regardless of production levels, while variable costs change with production volume.

Q3: Can fixed costs ever change?
A: Yes, but only due to new contractual agreements or significant business changes, not due to production levels.

Q4: Why is TFC important for startups?
A: Startups need to know their "burn rate" - how much they spend monthly before generating revenue.

Q5: How does TFC affect pricing decisions?
A: Fixed costs must be covered by gross profit, so they influence minimum pricing thresholds.