Suppose Sam's Shoe Co. makes one kind of shoe. An example of a fixed cost for this company would be:
A)the lease for the factory building.
B)the leather needed to make the shoes.
C)sewing machine needles that need to be replaced every 1,000 pairs.
D)All of these are examples of fixed costs.

Question

Quizplus · Accepted Answer

Fixed costs are expenses that do not change with the level of production or sales, such as the lease for the factory building. The cost of leather and sewing machine needles would vary depending on the number of shoes produced, making them variable costs, not fixed costs.