Oscar has negotiated a lease for his sporting goods store in which he is required to pay $2,500 per month in rent.Oscar pays his staff $9 per hour to sell sporting goods and his monthly electricity bill averages $700, depending on his total hours of operation.Oscar's fixed costs of production equal:
A)$2,500 per month.
B)$3,200 per month.
C)$9 per hour multiplied by total hours of work plus $700.
D)$9 per hour multiplied by total hours of work plus $3,200.

Question

Quizplus · Accepted Answer

Fixed costs are those that do not change with the level of production. In this case, the rent is a fixed cost because it is the same amount each month regardless of how many sporting goods Oscar sells.

Oscar Has Negotiated a Lease for His Sporting Goods Store