Marcella operates a small, but very successful art gallery. All but one of the following can be classified as a variable cost arising from the physical inputs Marcella requires to operate her business. Which is it?

Question

Quizplus · Accepted Answer

Variable costs vary with the level of output, while fixed costs remain constant regardless of output. The physical space for the gallery represents a fixed cost, as it does not change with the amount of art sold or displayed. Costs of purchasing artwork, wages for part-time employees, and accountant's fees for preparing tax returns can all vary depending on the level of business activity, making them variable costs.

Marcella Operates a Small, but Very Successful Art Gallery