Cost is the total expenditure incurred in producing a commodity. In economics, it is sum of total of actual expenditure incurred on inputs (i. e. explicit cost) and the imputed valued of inputs supplied by the owners (i. e. implicit cost). Fixed costsVariable costs DefinitionIncurred on hiring fixed factors of production Incurred on hiring variable factors of production VariabilityRemain constant irrespective of the units of output producedVary directly as per the variation in the output, then higher variable costs are incurred and vice-versa ExampleSalary of permanent staff, output produced, etc.Wages of casual labours, cost of raw materials, etc.