Which of the following formulas is correct?

Question

Total costs × Variable costs = Fixed costs

Fixed costs + Variable costs = Total costs

Fixed costs – Variable costs = Total costs

Variable costs – Fixed costs = Total costs

Answer 1

The correct formula is:

Fixed costs + Variable costs = Total costs

This equation reflects the relationship between fixed costs, variable costs, and total costs in cost accounting. Fixed costs remain constant regardless of the level of production, while variable costs change with the level of output. Therefore, to find the total costs, you add fixed costs and variable costs together.