Maddie noticed that many students on campus had t-shirts and sweatshirts with Greek organization letters or club names on them. Recognizing that there was a huge market for this attire, Maddie rented a store front and a silk screening machine to get into the t-shirt business. Maddie's rent is $1,000 a month, including utilities. The silk screen machine leases for $300 a month. Maddie can buy blank t-shirts for $6 each and sweatshirts for $10 each. Maddie calculated the cost of materials for the silk screening at $2 per unit. Considering only the figures presented above, what are Maddie's fixed costs?
A) $1300 a month
B) $1000 a month
C) $8 a unit
D) $700 a month

Question

Quizplus · Accepted Answer

Fixed costs are those that do not change with the level of production or sales. In this case, Maddie's fixed costs are the rent of $1,000 a month and the lease of the silk screen machine for $300 a month, totaling $1,300 a month.

Maddie Noticed That Many Students on Campus Had T-Shirts and Sweatshirts