Weaver Corporation has a three-year contract with a security firm that sets hourly wage rates for the firm at $10 per hour.At 7,000 units of output,factory security costs were $14,000.With an expected increase in production next year to a level of 10,000 units,the anticipated security costs are expected to remain the same.The security costs are an example of fixed factory costs.

Question

Quizplus · Accepted Answer

The security costs are set at a fixed hourly wage rate and do not change with an increase in production, making them an example of fixed factory costs.

Weaver Corporation Has a Three-Year Contract with a Security Firm