Figure 7-5
-Which of the following is a fixed cost?
A)Electricity
B)Worker bonuses
C)Mortgage on the building
D)Steel to produce refrigerators

Question

Figure 7-5 
-Which of the following is a fixed cost?
A)Electricity 
B)Worker bonuses 
C)Mortgage on the building 
D)Steel to produce refrigerators

Quizplus · Accepted Answer

A fixed cost is a cost that remains constant and does not change with changes in the level of production or sales. The mortgage on the building is a fixed cost because it does not change regardless of how many refrigerators are produced or sold. Electricity and steel for producing refrigerators are variable costs that vary with the level of production. Worker bonuses are also variable costs as they are dependent on the level of employee performance and productivity.

Figure 7-5 -Which of the Following Is a Fixed Cost