Suppose you're in the trucking business and you purchase a $100,000 truck with a one year loan for the full amount. Ignoring interest payments, what is your fixed cost per month?

Question

Quizplus · Accepted Answer

Fixed costs are costs that do not change with the level of output. In this case, the cost of the truck is a fixed cost because it remains constant regardless of how much the truck is used. Since the truck costs $100,000 and the loan is for one year, the fixed cost per month is $100,000 divided by 12 months, which equals $8,333.

Suppose You're in the Trucking Business and You Purchase a $100,000