Cy recently went into the business of producing and selling cardboard boxes. For this business, which of the following is most likely to be a fixed cost?
A)fire insurance
B)labor costs
C)paper costs
D)adhesive costs

Question

Quizplus · Accepted Answer

Fire insurance is a fixed cost because it is a recurring expense that does not vary with the level of production or sales. It is a necessary expense to protect the assets of the business and is not directly related to the production or sale of cardboard boxes. Labor costs, paper costs, and adhesive costs are variable costs because they increase or decrease as the level of production or sales changes.

Cy Recently Went into the Business of Producing and Selling