APM PMQ Business Case and Investment Appraisal 100% CORRECT SOLUTIONS

What is a fixed cost? - ANSWER A cost that remains the same over a given period of time irrespective of output/production changes e.g. rent, rates, step fixed costs. What is a variable cost? - ANSWER Refers to a constant amount per unit of output/production e.g. changes in proportion to the volume of output; materials used in production. (May change depending on departmental viewpoint) What is a semi-variable cost? - ANSWER Costs comprising both fixed and variable components e.g. phone tariff, photocopier. What are Direct Costs? - ANSWER Costs that can be specifically identified with a particular project or activity. e.g. cost of materials and labour in a manufacturing environment, software rented solely for one project.