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Fixed costs are defined as costs that remained constant regardless of any changes in a company's activity. Fixed cost is one of the key learning points from the simulation because total fixed costs remain the same even when the activity level changes within the relevant range, but fixed cost per unit goes down as activity level goes up...

There are two types of fixed costs: committed, discretionary. Committed fixed costs are long-term and cannot be reduced in the short-term such as insurance, real estate taxes, depreciation on property, plant and equipment. Discretionary fixed costs are associated with decisions made by management at least annually such as advertising programs, research programs, training programs, management development programs and employee recruiting programs...

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