Suppose Bev's Bags makes large and small handbags. Bev rents an industrial space where she keeps the company's fabric, industrial sewing machine, measuring board, cutting shears, extra needles, thread, buttons, and labels. Bev can produce three bags an hour, regardless of the size of the bag. Which of the following would be considered a fixed cost?

Question

Quizplus · Accepted Answer

Fixed costs are those that do not change with the level of production. The rent Bev pays for the industrial space is a fixed cost because it remains constant regardless of how many bags she produces.

Suppose Bev's Bags Makes Large and Small Handbags