The setup cost incurred in preparing a machine to produce a batch of product is an example of a
A) fixed charge.
B) random charge.
C) sunk cost.
D) variable cost.

Question

Quizplus · Accepted Answer

Setup costs are considered fixed costs because they do not vary with the level of production. Once the machine is set up, the cost is incurred regardless of the number of units produced.

The Setup Cost Incurred in Preparing a Machine to Produce