{"id":999971305,"date":"2025-03-26T19:46:52","date_gmt":"2025-03-26T12:46:52","guid":{"rendered":"https:\/\/bizzi.vn\/?p=999971305"},"modified":"2026-06-09T13:48:11","modified_gmt":"2026-06-09T06:48:11","slug":"what-is-fixed-cost","status":"publish","type":"post","link":"https:\/\/bizzi.vn\/en\/what-is-fixed-cost\/","title":{"rendered":"What is Fixed Cost? The Complete Guide to Fixed Cost for Business (2025)"},"content":{"rendered":"<p><em><strong>Fixed costs<\/strong> Fixed Cost is the total cost that a business must pay periodically, regardless of changes in production output or business activity level over a certain period of time. Understanding and controlling this type of cost is the core foundation for optimizing profits and making effective strategic decisions.<\/em><\/p>\n<p><em>This article will provide a comprehensive view from definition, calculation, comparison with<strong> variable cost<\/strong>, to fixed cost management and optimization strategies, helping business owners and financial managers build a solid operating foundation.<\/em><b><\/b><\/p>\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_80 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Index<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewbox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewbox=\"0 0 24 24\" version=\"1.2\" baseprofile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/bizzi.vn\/en\/what-is-fixed-cost\/#1_Dinh_nghia_chi_phi_co_dinh\" >1. Definition of fixed costs<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/bizzi.vn\/en\/what-is-fixed-cost\/#2_Dac_diem_chinh_cua_chi_phi_co_dinh\" >2. Main characteristics of fixed costs<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/bizzi.vn\/en\/what-is-fixed-cost\/#3_Cac_thanh_phan_chinh_cau_tao_nen_chi_phi_co_dinh\" >3. Main components that make up fixed costs<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/bizzi.vn\/en\/what-is-fixed-cost\/#4_Phan_loai_chi_phi_co_dinh_pho_bien_trong_doanh_nghiep\" >4. Classification of common fixed costs in businesses<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/bizzi.vn\/en\/what-is-fixed-cost\/#41_Dua_tren_yeu_to_quan_ly\" >4.1. Based on management factors<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/bizzi.vn\/en\/what-is-fixed-cost\/#42_Dua_tren_yeu_to_phan_bo\" >4.2. Based on allocation factors<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/bizzi.vn\/en\/what-is-fixed-cost\/#43_Chi_phi_co_dinh_cap_bac_Step-Fixed_Costs\" >4.3. Step-Fixed Costs<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/bizzi.vn\/en\/what-is-fixed-cost\/#5_Cong_thuc_tinh_chi_phi_co_dinh_chinh_xac_nhat\" >5. The most accurate formula for calculating fixed costs<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/bizzi.vn\/en\/what-is-fixed-cost\/#51_Phuong_phap_truc_tiep_cong_thuc_co_ban\" >5.1. Direct method (basic formula)<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/bizzi.vn\/en\/what-is-fixed-cost\/#52_Phuong_phap_diem_cao_%E2%80%93_diem_thap_dua_tren_muc_hoat_dong\" >5.2. High-low point method (based on activity level)<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/bizzi.vn\/en\/what-is-fixed-cost\/#6_Phan_biet_chi_phi_co_dinh_va_chi_phi_bien_doi_Fixed_Cost_vs_Variable_Cost\" >6. Distinguish between fixed costs and variable costs (Fixed Cost vs. Variable Cost)<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/bizzi.vn\/en\/what-is-fixed-cost\/#7_Tam_quan_trong_cua_chi_phi_co_dinh_trong_quan_tri_tai_chinh\" >7. The importance of fixed costs in financial management<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/bizzi.vn\/en\/what-is-fixed-cost\/#71_Xac_dinh_muc_chi_phi_toi_thieu_de_duy_tri_hoat_dong\" >7.1. Determine the minimum cost to maintain operations<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/bizzi.vn\/en\/what-is-fixed-cost\/#72_La_co_so_de_ra_quyet_dinh_kinh_doanh_chien_luoc\" >7.2. As a basis for making strategic business decisions<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/bizzi.vn\/en\/what-is-fixed-cost\/#73_Ung_dung_chi_phi_co_dinh_trong_phan_tich_diem_hoa_von\" >7.3. Application of fixed costs in break-even analysis<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-16\" href=\"https:\/\/bizzi.vn\/en\/what-is-fixed-cost\/#8_5_Meo_toi_uu_chi_phi_co_dinh_hieu_qua_cho_doanh_nghiep\" >8. 5 Tips to optimize fixed costs effectively for businesses<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-17\" href=\"https:\/\/bizzi.vn\/en\/what-is-fixed-cost\/#9_Bizzi_Giai_phap_tu_dong_hoa_quan_ly_chi_phi_co_dinh\" >9. Bizzi: Fixed Cost Management Automation Solution<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-18\" href=\"https:\/\/bizzi.vn\/en\/what-is-fixed-cost\/#Tu_dong_hoa_quy_trinh_phe_duyet_chi_phi\" >Automate the expense approval process<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-19\" href=\"https:\/\/bizzi.vn\/en\/what-is-fixed-cost\/#Thiet_lap_chinh_sach_chi_tieu_linh_hoat\" >Set up flexible spending policies<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-20\" href=\"https:\/\/bizzi.vn\/en\/what-is-fixed-cost\/#Lap_ngan_sach_va_theo_doi_chi_phi_theo_thoi_gian_thuc\" >Budget and track expenses in real time<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-21\" href=\"https:\/\/bizzi.vn\/en\/what-is-fixed-cost\/#Tich_hop_lien_mach_voi_he_thong_ERP\" >Seamless integration with ERP systems<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-22\" href=\"https:\/\/bizzi.vn\/en\/what-is-fixed-cost\/#Tang_cuong_minh_bach_va_trach_nhiem_trong_chi_tieu\" >Increase transparency and accountability in spending<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-23\" href=\"https:\/\/bizzi.vn\/en\/what-is-fixed-cost\/#Ket_luan\" >Conclude<\/a><\/li><\/ul><\/nav><\/div>\n<h2><span class=\"ez-toc-section\" id=\"1_Dinh_nghia_chi_phi_co_dinh\"><\/span><b><b>1. Definition of fixed costs<\/b><\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<blockquote><p><em>Fixed costs are expenses that a business must pay periodically, not changing with production output or revenue in a certain period of time. Regardless of whether the business is strong or weak, these expenses still need to be paid to maintain the existence of the operating apparatus.<\/em><\/p><\/blockquote>\n<p><b>Common examples of fixed costs include:<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\">Office and factory rent<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\">Office and management staff salaries (not calculated by product)<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\">Depreciation costs of fixed assets (machinery, factories)<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\">Regular maintenance costs, property insurance<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\">Administrative fees, legal fees, bank interest<\/li>\n<\/ul>\n<figure id=\"attachment_999971309\" aria-describedby=\"caption-attachment-999971309\" style=\"width: 1600px\" class=\"wp-caption alignnone\"><img fetchpriority=\"high\" decoding=\"async\" class=\"size-full wp-image-999971309\" src=\"https:\/\/bizzi.vn\/wp-content\/uploads\/2025\/03\/01-kiem-soat-chi-phi-co-dinh-cua-doanh-nghiep.jpg\" alt=\"Controlling fixed costs in business - examples and methods\" width=\"1600\" height=\"900\" title=\"\" srcset=\"https:\/\/bizzi.vn\/wp-content\/uploads\/2025\/03\/01-kiem-soat-chi-phi-co-dinh-cua-doanh-nghiep.jpg 1600w, https:\/\/bizzi.vn\/wp-content\/uploads\/2025\/03\/01-kiem-soat-chi-phi-co-dinh-cua-doanh-nghiep-300x169.jpg 300w, https:\/\/bizzi.vn\/wp-content\/uploads\/2025\/03\/01-kiem-soat-chi-phi-co-dinh-cua-doanh-nghiep-1024x576.jpg 1024w, https:\/\/bizzi.vn\/wp-content\/uploads\/2025\/03\/01-kiem-soat-chi-phi-co-dinh-cua-doanh-nghiep-768x432.jpg 768w, https:\/\/bizzi.vn\/wp-content\/uploads\/2025\/03\/01-kiem-soat-chi-phi-co-dinh-cua-doanh-nghiep-1536x864.jpg 1536w, https:\/\/bizzi.vn\/wp-content\/uploads\/2025\/03\/01-kiem-soat-chi-phi-co-dinh-cua-doanh-nghiep-18x10.jpg 18w\" sizes=\"(max-width: 1600px) 100vw, 1600px\" \/><figcaption id=\"caption-attachment-999971309\" class=\"wp-caption-text\">Controlling fixed costs in business \u2013 examples and methods<\/figcaption><\/figure>\n<h2><span class=\"ez-toc-section\" id=\"2_Dac_diem_chinh_cua_chi_phi_co_dinh\"><\/span><b><b>2. Main characteristics of fixed costs<\/b><\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><strong>Fixed costs<\/strong> has unique characteristics that businesses need to master to effectively manage finances. These characteristics help distinguish it from other types of costs and are the basis for business planning.<\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b><b>Stability and periodicity: <\/b><\/b>Fixed costs remain at a roughly constant level over an accounting period (month, quarter, year). Businesses must pay these expenses periodically, regardless of whether business is good or bad.<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b><b>No change in output: <\/b><\/b>This is the key feature. Whether output doubles or halves, expenses such as factory rent and insurance remain the same. This creates economies of scale as output increases.<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b><b>Persists when there is no activity: <\/b><\/b>Even if the business temporarily stops production (output is zero), <strong><a href=\"https:\/\/bizzi.vn\/chi-phi-phat-sinh-la-gi-huong-dan-quan-ly-chi-tiet-va-cu-the-ve-chi-phi-phat-sinh\/\">fixed costs still arise<\/a><\/strong>. This is the biggest financial burden during times of crisis.<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b><b>Can be adjusted according to long-term strategy: <\/b><\/b>Although \u201cfixed\u201d in the short term, businesses can completely change these costs in the long term through strategic decisions such as expanding factories, downsizing, or renegotiating leases.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<figure id=\"attachment_999971486\" aria-describedby=\"caption-attachment-999971486\" style=\"width: 1600px\" class=\"wp-caption alignnone\"><img decoding=\"async\" class=\"size-full wp-image-999971486\" src=\"https:\/\/bizzi.vn\/wp-content\/uploads\/2025\/03\/02-dac-diem-cua-chi-phi-lai-vay.jpg\" alt=\"Characteristics of fixed costs: stable, periodic, independent of output\" width=\"1600\" height=\"900\" title=\"\" srcset=\"https:\/\/bizzi.vn\/wp-content\/uploads\/2025\/03\/02-dac-diem-cua-chi-phi-lai-vay.jpg 1600w, https:\/\/bizzi.vn\/wp-content\/uploads\/2025\/03\/02-dac-diem-cua-chi-phi-lai-vay-300x169.jpg 300w, https:\/\/bizzi.vn\/wp-content\/uploads\/2025\/03\/02-dac-diem-cua-chi-phi-lai-vay-1024x576.jpg 1024w, https:\/\/bizzi.vn\/wp-content\/uploads\/2025\/03\/02-dac-diem-cua-chi-phi-lai-vay-768x432.jpg 768w, https:\/\/bizzi.vn\/wp-content\/uploads\/2025\/03\/02-dac-diem-cua-chi-phi-lai-vay-1536x864.jpg 1536w, https:\/\/bizzi.vn\/wp-content\/uploads\/2025\/03\/02-dac-diem-cua-chi-phi-lai-vay-18x10.jpg 18w\" sizes=\"(max-width: 1600px) 100vw, 1600px\" \/><figcaption id=\"caption-attachment-999971486\" class=\"wp-caption-text\">Characteristics of fixed costs: stable, periodic, independent of output<\/figcaption><\/figure>\n<h2><span class=\"ez-toc-section\" id=\"3_Cac_thanh_phan_chinh_cau_tao_nen_chi_phi_co_dinh\"><\/span><b><b>3. Main components that make up fixed costs<\/b><\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Fixed costs are made up of many different items. Businesses need to clearly identify each component to have a reasonable control plan and budget allocation.<\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b><b>Indirect labor wages<\/b>: <\/b>Including salaries of administrative staff, accountants, managers, security guards... positions that do not directly create products.<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b><b>Rent<\/b>: <\/b>Including office, warehouse and factory rental costs under long-term or short-term contracts.<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b><b>Fixed asset depreciation costs<\/b>: <\/b>Is the allocation of the value of assets (machinery, equipment, factories) into <strong><a href=\"https:\/\/bizzi.vn\/chi-phi-san-xuat-la-gi\/\">production and business costs<\/a><\/strong> during its useful life.<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b><b>Insurance<\/b>: <\/b>Compulsory insurance (social insurance, health insurance) for employees and property insurance, fire insurance for factories.<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b><b>Bank interest<\/b>: <\/b>If a business borrows money to invest in fixed assets or supplement working capital, the periodic interest payments are a fixed cost.<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b><b>Administrative service costs<\/b>: <\/b>Including expenses such as electricity, water, internet, telephone, management software, etc. Although there are small variable factors, they are often classified as fixed costs because of their regular occurrence to maintain operations.<\/li>\n<\/ul>\n<h2><span class=\"ez-toc-section\" id=\"4_Phan_loai_chi_phi_co_dinh_pho_bien_trong_doanh_nghiep\"><\/span><b><b>4. Classification of common fixed costs in businesses<\/b><\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Classifying fixed costs helps businesses have a more detailed perspective for management. Based on the nature and management purpose, fixed costs can be divided into the following types:<\/p>\n<figure id=\"attachment_999972643\" aria-describedby=\"caption-attachment-999972643\" style=\"width: 1920px\" class=\"wp-caption alignnone\"><img decoding=\"async\" class=\"size-full wp-image-999972643\" src=\"https:\/\/bizzi.vn\/wp-content\/uploads\/2025\/04\/03-cac-loai-chi-phi-von.jpg\" alt=\"Types of fixed costs and illustrative examples\" width=\"1920\" height=\"1080\" title=\"\" srcset=\"https:\/\/bizzi.vn\/wp-content\/uploads\/2025\/04\/03-cac-loai-chi-phi-von.jpg 1920w, https:\/\/bizzi.vn\/wp-content\/uploads\/2025\/04\/03-cac-loai-chi-phi-von-300x169.jpg 300w, https:\/\/bizzi.vn\/wp-content\/uploads\/2025\/04\/03-cac-loai-chi-phi-von-1024x576.jpg 1024w, https:\/\/bizzi.vn\/wp-content\/uploads\/2025\/04\/03-cac-loai-chi-phi-von-768x432.jpg 768w, https:\/\/bizzi.vn\/wp-content\/uploads\/2025\/04\/03-cac-loai-chi-phi-von-1536x864.jpg 1536w, https:\/\/bizzi.vn\/wp-content\/uploads\/2025\/04\/03-cac-loai-chi-phi-von-18x10.jpg 18w\" sizes=\"(max-width: 1920px) 100vw, 1920px\" \/><figcaption id=\"caption-attachment-999972643\" class=\"wp-caption-text\">Types of fixed costs and illustrative examples<\/figcaption><\/figure>\n<h3><span class=\"ez-toc-section\" id=\"41_Dua_tren_yeu_to_quan_ly\"><\/span><b><b>4.1. Based on management factors<\/b><\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li><b><b>Committed Fixed Costs: <\/b><\/b>These are costs that arise from the ownership of the basic physical facilities, machinery and organization of the business. They cannot be reduced in the short term without seriously affecting operations. Examples: depreciation costs, long-term factory rent.<\/li>\n<li><strong>Discretionary Fixed Costs: <\/strong>These are costs that arise from annual management decisions and can be changed or cut without immediately affecting core operations. Examples: advertising costs, research and development, employee training.<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"42_Dua_tren_yeu_to_phan_bo\"><\/span>4.2. Based on allocation factors<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><strong>Periodic fixed costs:<\/strong><\/p>\n<ul>\n<li style=\"list-style-type: none;\">\n<ul>Are expenses that are calculated and made regularly over a period of time. For example: office rent, monthly salaries of management staff.<\/ul>\n<\/li>\n<\/ul>\n<ul>\n<li><strong>Allocable fixed costs<\/strong>: Usually a one-time investment but the value is gradually allocated to expenses over many periods. The most typical example is the depreciation cost of machinery and equipment.<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"43_Chi_phi_co_dinh_cap_bac_Step-Fixed_Costs\"><\/span>4.3. Step-Fixed Costs<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>This is a type of fixed cost that is only fixed within a certain range of activity and will change (jump) when the activity level exceeds a critical threshold.<\/p>\n<p><strong>Illustration:<\/strong> A garment factory with 1 supervisor (salary 15 million\/month) can manage up to 20 workers. The supervisor&#039;s salary cost is 15 million\/month when the factory size is from 1-20 workers. However, when the company recruits the 21st worker, they need to hire another supervisor. At this time, the fixed cost for the supervisor&#039;s salary will &quot;jump&quot; to 30 million\/month.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"5_Cong_thuc_tinh_chi_phi_co_dinh_chinh_xac_nhat\"><\/span>5. The most accurate formula for calculating fixed costs<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Accurately determining fixed costs is the first step to financial control. Businesses can use the following formulas to calculate them.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"51_Phuong_phap_truc_tiep_cong_thuc_co_ban\"><\/span>5.1. Direct method (basic formula)<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>This is the simplest and most common method, based on taking total costs minus variable costs.<\/p>\n<p style=\"text-align: center;\" data-start=\"0\" data-end=\"78\"><strong>Fixed cost (FC) = Total cost (TC) \u2013 Total variable cost (VC)<\/strong><\/p>\n<ul>\n<li><strong>Total cost (TC):<\/strong> Total operating costs for the period.<\/li>\n<li><strong>Total variable cost (VC):<\/strong> Total costs vary directly with output.<\/li>\n<\/ul>\n<p>For example: In May, the total cost of company A is 800 million VND. The accountant determines the total variable cost (raw materials, production worker salaries, etc.) is 450 million VND. So the fixed cost will be:<\/p>\n<p style=\"text-align: center;\"><strong>FC = 800 \u2013 450 = 350 million VND.<\/strong><\/p>\n<h3><span class=\"ez-toc-section\" id=\"52_Phuong_phap_diem_cao_%E2%80%93_diem_thap_dua_tren_muc_hoat_dong\"><\/span>5.2. High-low point method (based on activity level)<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>This method is more complex but gives accurate results when it comes to separating mixed costs. It helps determine fixed costs by analyzing cost variations at the highest and lowest levels of activity.<\/p>\n<p><strong>Step 1: Calculate variable cost per unit<\/strong><\/p>\n<p>(Highest operating fee \u2013 Lowest operating fee) \/ (Highest operating unit \u2013 Lowest operating unit)<\/p>\n<p><strong>Step 2: Calculate total fixed costs<\/strong><\/p>\n<p><strong>FC = Highest operating cost \u2013 (Variable cost per unit x Highest operating unit)<\/strong><\/p>\n<p><strong>For example:<\/strong> A business has the highest operating cost of 600 million VND when producing 5,000 products and the lowest cost of 400 million when producing 3,000 products.<\/p>\n<ul>\n<li><strong>Step 1: Variable cost\/product = (600 \u2013 400) \/ (5,000 \u2013 3,000) = 200 \/ 2,000 = 0.1 million VND (100,000 VND).<\/strong><\/li>\n<li><strong>Step 2: Fixed cost = 600 \u2013 (0.1 x 5,000) = 600 \u2013 500 = 100 million VND.<\/strong><\/li>\n<\/ul>\n<h2><span class=\"ez-toc-section\" id=\"6_Phan_biet_chi_phi_co_dinh_va_chi_phi_bien_doi_Fixed_Cost_vs_Variable_Cost\"><\/span>6. Distinguish between fixed costs and variable costs (Fixed Cost vs. Variable Cost)<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Understanding the difference between fixed and variable costs is a must in financial management. Confusion can lead to wrong decisions about selling price, output and profit.<\/p>\n<p data-start=\"121\" data-end=\"204\"><strong data-start=\"121\" data-end=\"202\">Comparison table of Fixed Cost and Variable Cost<\/strong><\/p>\n<div class=\"_tableContainer_16hzy_1\">\n<div class=\"_tableWrapper_16hzy_14 group flex w-fit flex-col-reverse\" tabindex=\"-1\">\n<table class=\"w-fit min-w-(--thread-content-width)\" data-start=\"206\" data-end=\"1150\">\n<thead data-start=\"206\" data-end=\"296\">\n<tr data-start=\"206\" data-end=\"296\">\n<th data-start=\"206\" data-end=\"221\" data-col-size=\"sm\"><strong data-start=\"208\" data-end=\"220\">Criteria<\/strong><\/th>\n<th data-start=\"221\" data-end=\"256\" data-col-size=\"md\"><strong data-start=\"223\" data-end=\"255\">Fixed Cost<\/strong><\/th>\n<th data-start=\"256\" data-end=\"296\" data-col-size=\"md\"><strong data-start=\"258\" data-end=\"294\">Variable Cost<\/strong><\/th>\n<\/tr>\n<\/thead>\n<tbody data-start=\"388\" data-end=\"1150\">\n<tr data-start=\"388\" data-end=\"562\">\n<td data-start=\"388\" data-end=\"405\" data-col-size=\"sm\"><strong data-start=\"390\" data-end=\"404\">Define<\/strong><\/td>\n<td data-start=\"405\" data-end=\"478\" data-col-size=\"md\">Are costs that do not change when output or revenue changes.<\/td>\n<td data-start=\"478\" data-end=\"562\" data-col-size=\"md\">Are costs that vary directly and proportionally with output or revenue.<\/td>\n<\/tr>\n<tr data-start=\"563\" data-end=\"658\">\n<td data-start=\"563\" data-end=\"578\" data-col-size=\"sm\"><strong data-start=\"565\" data-end=\"577\">Nature<\/strong><\/td>\n<td data-start=\"578\" data-end=\"622\" data-col-size=\"md\">Cost of time, maintenance.<\/td>\n<td data-start=\"622\" data-end=\"658\" data-col-size=\"md\">Cost of production.<\/td>\n<\/tr>\n<tr data-start=\"659\" data-end=\"727\">\n<td data-start=\"659\" data-end=\"683\" data-col-size=\"sm\"><strong data-start=\"661\" data-end=\"682\">When output = 0<\/strong><\/td>\n<td data-start=\"683\" data-end=\"707\" data-col-size=\"md\">Still present (FC &gt; 0).<\/td>\n<td data-start=\"707\" data-end=\"727\" data-col-size=\"md\">Equal to 0 (VC = 0).<\/td>\n<\/tr>\n<tr data-start=\"728\" data-end=\"827\">\n<td data-start=\"728\" data-end=\"763\" data-col-size=\"sm\"><strong data-start=\"730\" data-end=\"762\">Cost per unit of product<\/strong><\/td>\n<td data-start=\"763\" data-end=\"790\" data-col-size=\"md\">Decreases as output increases.<\/td>\n<td data-start=\"790\" data-end=\"827\" data-col-size=\"md\">Does not change when output changes.<\/td>\n<\/tr>\n<tr data-start=\"828\" data-end=\"1012\">\n<td data-start=\"828\" data-end=\"840\" data-col-size=\"sm\"><strong data-start=\"830\" data-end=\"839\">For example<\/strong><\/td>\n<td data-start=\"840\" data-end=\"911\" data-col-size=\"md\">Rent, depreciation, office salaries, bank interest.<\/td>\n<td data-start=\"911\" data-end=\"1012\" data-col-size=\"md\">Raw materials, production staff salaries per product, packaging costs, sales commissions.<\/td>\n<\/tr>\n<tr data-start=\"1013\" data-end=\"1150\">\n<td data-start=\"1013\" data-end=\"1033\" data-col-size=\"sm\"><strong data-start=\"1015\" data-end=\"1032\">Risk Level<\/strong><\/td>\n<td data-start=\"1033\" data-end=\"1100\" data-col-size=\"md\">Higher, creating operating leverage. Burden when revenue is low.<\/td>\n<td data-start=\"1100\" data-end=\"1150\" data-col-size=\"md\">Lower, flexible according to business situation.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<\/div>\n<h2><span class=\"ez-toc-section\" id=\"7_Tam_quan_trong_cua_chi_phi_co_dinh_trong_quan_tri_tai_chinh\"><\/span>7. The importance of fixed costs in financial management<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Fixed costs are not just a number on a financial statement, they are also a strategic factor that deeply affects every business decision of an enterprise.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"71_Xac_dinh_muc_chi_phi_toi_thieu_de_duy_tri_hoat_dong\"><\/span>7.1. Determine the minimum cost to maintain operations<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><strong>Fixed costs<\/strong> is the \u201csurvival threshold\u201d of the business. By determining the total monthly fixed costs, management knows exactly how much revenue they need to generate to break even. This is the basis for<strong> <a href=\"https:\/\/bizzi.vn\/lap-ngan-sach-la-gi\/\">effective budgeting<\/a> <\/strong>and set achievable business goals.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"72_La_co_so_de_ra_quyet_dinh_kinh_doanh_chien_luoc\"><\/span>7.2. As a basis for making strategic business decisions<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Fixed cost analysis helps businesses make important decisions such as:<\/p>\n<ul>\n<li><strong>Product pricing:<\/strong> The selling price must be high enough to cover both the variable and fixed costs allocated to each product.<\/li>\n<li><strong>Expand or contract:<\/strong> The decision to invest in additional machinery (increasing fixed costs) is only made when the output forecast is large enough to &quot;bear&quot; the additional costs.<\/li>\n<li><strong>Continue or discontinue a product line:<\/strong> If the revenue from a product is not enough to cover its variable costs, discontinuing production is necessary.<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"73_Ung_dung_chi_phi_co_dinh_trong_phan_tich_diem_hoa_von\"><\/span>7.3. Application of fixed costs in break-even analysis<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>One of the most important applications of fixed costs is the basis for <strong>break-even point<\/strong> (Break-Even Point) \u2013 the level of output or revenue at which total revenue equals total costs. Break-even point analysis helps businesses answer the question \u201cHow many products must be sold to avoid a loss?\u201d.<\/p>\n<p>Break-even point formula for output = Total fixed costs \/ (Unit selling price \u2013 Variable costs per unit)<\/p>\n<p>Good control of fixed costs (keeping them low) will directly reduce the break-even point, helping businesses achieve profits more quickly.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"8_5_Meo_toi_uu_chi_phi_co_dinh_hieu_qua_cho_doanh_nghiep\"><\/span>8. 5 Tips to optimize fixed costs effectively for businesses<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Control<strong> fixed cost<\/strong> It doesn\u2019t mean cutting corners, it means spending wisely to maximize efficiency. Here are proven strategies to help businesses ease this burden.<\/p>\n<ul>\n<li><strong>Outsourcing instead of permanent recruitment:<\/strong> Non-core jobs such as tax accounting, IT, marketing, legal can be outsourced to save on salaries, insurance, office space and training costs.<\/li>\n<li><strong>Contract renegotiation:<\/strong> Periodically review your leases and service provider (internet, software) agreements. The market is always changing and you may be able to find better deals.<\/li>\n<li><strong>Switch to flexible workspace:<\/strong> Instead of renting a traditional office long-term, consider a co-working space model or allowing employees to work remotely to significantly reduce rental and utility costs.<\/li>\n<li><strong>Liquidation of unused assets:<\/strong> Review all assets, machinery and equipment. Anything that is no longer needed or is not operating effectively should be liquidated to reduce maintenance and depreciation costs.<\/li>\n<li><strong>Applying technology to automate:<\/strong> Investing in management software and automation systems can increase<strong> fixed cost<\/strong> initially but will help reduce personnel and operating costs in the long term, resulting in higher efficiency.<\/li>\n<\/ul>\n<p>Looking to automate your expense management process to cut errors and save time? Explore the solutions below.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"9_Bizzi_Giai_phap_tu_dong_hoa_quan_ly_chi_phi_co_dinh\"><\/span>9. Bizzi: Fixed Cost Management Automation Solution<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Once you have identified and planned for optimization, implementing a powerful tool for execution and control is the next step. Bizzi is the solution that helps businesses <strong>Automate fixed cost management<\/strong>, increase transparency and optimize cash flow.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Tu_dong_hoa_quy_trinh_phe_duyet_chi_phi\"><\/span><strong>Automate the expense approval process<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Bizzi with <strong><a href=\"https:\/\/bizzi.vn\/quan-ly-chi-phi\/\">Enterprise cost management solutions<\/a><\/strong> helps simplify and automate the entire expense creation and approval process. Thereby, helping to minimize errors and shorten processing time. Thanks to that, all expenses are strictly controlled, quickly approved, ensuring transparency in financial management.<\/p>\n<figure id=\"attachment_999966579\" aria-describedby=\"caption-attachment-999966579\" style=\"width: 1600px\" class=\"wp-caption alignnone\"><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-999966579\" src=\"https:\/\/bizzi.vn\/wp-content\/uploads\/2024\/03\/Bizzi-Expense.webp\" alt=\"cost management solution\" width=\"1600\" height=\"900\" title=\"\" srcset=\"https:\/\/bizzi.vn\/wp-content\/uploads\/2024\/03\/Bizzi-Expense.webp 1600w, https:\/\/bizzi.vn\/wp-content\/uploads\/2024\/03\/Bizzi-Expense-300x169.webp 300w, https:\/\/bizzi.vn\/wp-content\/uploads\/2024\/03\/Bizzi-Expense-1024x576.webp 1024w, https:\/\/bizzi.vn\/wp-content\/uploads\/2024\/03\/Bizzi-Expense-768x432.webp 768w, https:\/\/bizzi.vn\/wp-content\/uploads\/2024\/03\/Bizzi-Expense-1536x864.webp 1536w, https:\/\/bizzi.vn\/wp-content\/uploads\/2024\/03\/Bizzi-Expense-18x10.webp 18w\" sizes=\"(max-width: 1600px) 100vw, 1600px\" \/><figcaption id=\"caption-attachment-999966579\" class=\"wp-caption-text\">Bizzi Expense \u2013 Expense management solution<\/figcaption><\/figure>\n<h3><span class=\"ez-toc-section\" id=\"Thiet_lap_chinh_sach_chi_tieu_linh_hoat\"><\/span>Set up flexible spending policies<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Businesses can easily set up separate spending policies for each department, project or type of product. <strong>fixed cost<\/strong> such as office rent, fixed asset depreciation. This has helped optimize the budget and avoid unnecessary waste.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Lap_ngan_sach_va_theo_doi_chi_phi_theo_thoi_gian_thuc\"><\/span>Budget and track expenses in real time<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Bizzi allows businesses to create detailed budgets for each department and project, and track cash flow in real time. As a result, businesses can quickly identify ineffective spending and make timely adjustments to optimize finances.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Tich_hop_lien_mach_voi_he_thong_ERP\"><\/span>Seamless integration with ERP systems<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Bizzi connects easily with ERP systems, helping to synchronize financial data accurately and continuously. This gives businesses a more comprehensive view of their financial situation, helping them make more accurate strategic decisions.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-999967189\" src=\"https:\/\/bizzi.vn\/wp-content\/uploads\/2024\/03\/Bizzi-Expense-1-1.webp\" alt=\"bizzi expense management system\" width=\"1600\" height=\"900\" title=\"\" srcset=\"https:\/\/bizzi.vn\/wp-content\/uploads\/2024\/03\/Bizzi-Expense-1-1.webp 1600w, https:\/\/bizzi.vn\/wp-content\/uploads\/2024\/03\/Bizzi-Expense-1-1-300x169.webp 300w, https:\/\/bizzi.vn\/wp-content\/uploads\/2024\/03\/Bizzi-Expense-1-1-1024x576.webp 1024w, https:\/\/bizzi.vn\/wp-content\/uploads\/2024\/03\/Bizzi-Expense-1-1-768x432.webp 768w, https:\/\/bizzi.vn\/wp-content\/uploads\/2024\/03\/Bizzi-Expense-1-1-1536x864.webp 1536w, https:\/\/bizzi.vn\/wp-content\/uploads\/2024\/03\/Bizzi-Expense-1-1-18x10.webp 18w\" sizes=\"(max-width: 1600px) 100vw, 1600px\" \/><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Tang_cuong_minh_bach_va_trach_nhiem_trong_chi_tieu\"><\/span>Increase transparency and accountability in spending<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>With Bizzi, businesses can establish a clear and transparent cost control process that not only helps prevent misuse of funds but also promotes accountability in internal financial management.<\/p>\n<p>Learn how Bizzi helps you automate your 90% processes <strong><a href=\"https:\/\/bizzi.vn\/huong-dan-quan-tri-chi-phi-kinh-doanh\/\">business cost management<\/a><\/strong> and save hours for the accounting department.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Ket_luan\"><\/span>Conclude<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>In short, <strong>fixed cost<\/strong> is an indispensable part of the financial structure of every business. Instead of seeing it as a burden, businesses should see it as an investment to maintain the operating machine. Good management <strong>fixed cost<\/strong> From identification, classification, accurate calculation to the application of optimal strategies and automation tools will create strong leverage, helping businesses not only survive but also develop sustainably in a volatile market.<\/p>\n<blockquote><p>Note: The definitions and methods in the article comply with general accounting principles and refer to standards from Circular 200\/2014\/TT-BTC of the Ministry of Finance of Vietnam. The content is for reference only and should be adjusted to suit each specific type of enterprise.<\/p><\/blockquote>\n<p><strong>See more:<\/strong><\/p>\n<ul>\n<li><strong><a href=\"https:\/\/bizzi.vn\/chi-phi-quan-ly-doanh-nghiep-la-gi\/\">What are business management costs?<\/a><\/strong><\/li>\n<li><strong><a href=\"https:\/\/bizzi.vn\/chi-phi-can-bien-la-gi\/\">What is marginal cost?<\/a><\/strong><\/li>\n<\/ul>","protected":false},"excerpt":{"rendered":"<p>Fixed costs are all expenses that a business is required to pay periodically, regardless of\u2026<\/p>","protected":false},"author":57,"featured_media":999971310,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"content-type":"","inline_featured_image":false,"footnotes":""},"categories":[263],"tags":[],"class_list":["post-999971305","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-kien-thuc"],"acf":[],"_links":{"self":[{"href":"https:\/\/bizzi.vn\/en\/wp-json\/wp\/v2\/posts\/999971305","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bizzi.vn\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bizzi.vn\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bizzi.vn\/en\/wp-json\/wp\/v2\/users\/57"}],"replies":[{"embeddable":true,"href":"https:\/\/bizzi.vn\/en\/wp-json\/wp\/v2\/comments?post=999971305"}],"version-history":[{"count":12,"href":"https:\/\/bizzi.vn\/en\/wp-json\/wp\/v2\/posts\/999971305\/revisions"}],"predecessor-version":[{"id":999978087,"href":"https:\/\/bizzi.vn\/en\/wp-json\/wp\/v2\/posts\/999971305\/revisions\/999978087"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bizzi.vn\/en\/wp-json\/wp\/v2\/media\/999971310"}],"wp:attachment":[{"href":"https:\/\/bizzi.vn\/en\/wp-json\/wp\/v2\/media?parent=999971305"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bizzi.vn\/en\/wp-json\/wp\/v2\/categories?post=999971305"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bizzi.vn\/en\/wp-json\/wp\/v2\/tags?post=999971305"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}