Paul's Plumbing is a small business that employs 12 people. Which of the following is most likely to be a fixed cost for Paul's Plumbing?

Question

Quizplus · Accepted Answer

The tax and insurance payments on the property owned by the firm are most likely a fixed cost since they do not vary with the level of production or sales. The wages paid to employees (B) and payroll taxes (C) are variable costs since they increase as the number of employees and their salaries increase. The salary paid to Paul (D) is a mixed cost since it may include both fixed and variable components, depending on the terms of his employment agreement.

Paul's Plumbing Is a Small Business That Employs 12 People