A sawmill processes logs into timber.Identify the costs below that are an example of a fixed cost.(i) rent paid on the factory
(ii) maintenance of the trucks used for transport of logs
(iii) wages of the workers
A)(i) only
B)(i) and (ii)
C)(ii) and (iii)
D)(i), (ii) and (iii)

Question

Quizplus · Accepted Answer

Rent paid on the factory is a fixed cost as it is a recurring expense that does not vary based on the level of production or number of logs processed. Maintenance costs and wages are examples of variable costs as they increase or decrease with the level of production.

A Sawmill Processes Logs into Timber