ECONOMICS
COMPETITION AND MARKET STRUCTURES
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Fixed
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Variable
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Either A or B
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None of the above
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Detailed explanation-1: -Cost of machinery and equipment: If the equipment is intended for long-term use, this type of asset would be considered a fixed cost. By contrast, the type of supplies that you burn through as part of production (toner ink, machinery oil) would be variable.
Detailed explanation-2: -Fixed costs remain the same throughout a specific period. Variable costs can increase or decrease based on the output of the business. Examples of fixed costs include rent, taxes, and insurance. Examples of variable costs include credit card fees, direct labor, and commission.
Detailed explanation-3: -Maintenance could be either a fixed or variable cost. If maintenance is due for each unit produced and it has a cost per unit, then it would be a variable cost. If it is independent of the amount produced (eg the client pays a fixed fee per year for general maintenance of a factory), then it would be a fixed cost.
Detailed explanation-4: -Fixed costs tend to be costs that are based on time rather than the quantity produced or sold by your business. 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.