Build an Honest Unit-Cost Model

Classify the behavior, not the name

A fixed cost stays the same as volume changes within a stated period and operating range. A variable cost changes with the number of units produced or delivered. The same category can behave differently under different arrangements: a flat monthly design fee is fixed, while a fee for each design is variable. State the unit and period before classifying costs. A capacity increase can introduce a new fixed cost, so a model valid for twenty orders may not remain valid for fifty.