ECONOMICS

Detailed explanation-1: -Rent, advertising, and administrative costs are examples of fixed costs, while examples of variable costs include raw materials, sales commissions, and packaging.

Detailed explanation-2: -Advertising cost is a fixed cost because these costs will remain constant or do not change with the change in the producing or selling units.

Detailed explanation-3: -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.

Detailed explanation-4: -As a result, even though ad costs can vary a lot, they are not considered a variable cost. Instead, advertising is a fixed expense-something that remains constant no matter how many products or services you provide to consumers.

Detailed explanation-5: -Advertising expense is classified as an operating expense. It is not part of the cost of goods sold. If a company pays advertising fees in advance, these fees are first recorded as a prepaid expense, which is a current asset.