Which of the following is most likely a fixed cost?
Answer: B. Property insurance premiums Explanation: Fixed cost refers to the component of the total cost which does not vary with the production level.
Answer and Explanation: The correct answer is option d. property taxes. A fixed cost does not change with the production volume within a relevant range for a given period of time.
Which of the following is most likely a fixed cost? The rent for a factory.
The different examples of fixed costs can be rent, salaries, and property taxes.
The answer is A. Rental costs for factory space are a fixed cost because the amount of output does not affect the amount the firm has to pay to rent the factory space.
A fixed cost is a cost that in total remains constant as volume of activity changes but on a per unit basis varies inversely with changes in volume of activity.
Wages paid to workers however can vary as the number of workers increase or decrease. Hence it is not considered as a fixed cost.
Examples of fixed costs are rent and lease costs, salaries, utility bills, insurance, and loan repayments.
Take your total cost of production and subtract your variable costs multiplied by the number of units you produced. This will give you your total fixed cost.
Total fixed costs are the sum of all consistent, non-variable expenses a company must pay. For example, suppose a company leases office space for $10,000 per month, rents machinery for $5,000 per month, and has a $1,000 monthly utility bill. In this case, the company's total fixed costs would be $16,000.
What is one example of a fixed cost and one example of a variable cost?
| Fixed Costs | Variable Costs | |
|---|---|---|
| Examples | Depreciation, interest paid on capital, rent, salary, property taxes, insurance premium, etc. | Commission on sales, credit card fees, wages of part-time staff, etc. |
Fixed costs are expenses that remain the same regardless of the level of production, while variable costs change based on the production output. Rent, advertising, and administrative costs are examples of fixed costs, while examples of variable costs include raw materials, sales commissions, and packaging.
This is a fixed compensation amount paid to employees, irrespective of their hours worked. Utilities. This is the cost of electricity, gas, phones, and so forth. This cost has a variable element, but is largely fixed.
Fixed costs are in contrast to variable costs, which increase or decrease with the company's level of production or business activity. Together, fixed costs and variable costs comprise the total cost of production. A fixed cost does not necessarily remain perfectly constant. It can vary.
The correct answer is option B. Fixed costs are constant in total, and variable costs are constant per unit.
Total fixed cost is the total sum of all fixed costs associated with a business. Fixed costs are not related to production in any way and do not change if production increases or decreases. Examples include rent on a building, utilities, property taxes and other mandatory business expenses.
Fixed costs include any number of expenses, including rental and lease payments, certain salaries, insurance, property taxes, interest expenses, depreciation, and some utilities.
Utilities: Expenses like internet, water, electricity, and heating are all fixed costs for accounting purposes. Although these might vary slightly according to use, they're predictable, usually similar expenses from month to month.
1. The correct answer is B) direct labor.
Answer: B. Property insurance premiums Explanation: Fixed cost refers to the component of the total cost which does not vary with the production level.
What are examples of fixed costs in healthcare?
Fixed Cost
Fixed costs are ones which do not change and are generally part of long term agreements. For instance, rent and malpractice premiums are common examples of fixed costs in medical practices. Other examples include capital expenditures, building maintenance, and utilities.
Examples of fixed costs are rent and lease costs, salaries, utility bills, insurance, and loan repayments. Some kinds of taxes, like business licenses, are also fixed costs. Since you have to pay fixed costs regardless of how much you sell, you should be careful about adding fixed costs to your small business.
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