Which of the following quotes best illustrates the idea of fixed cost?
A)"As we increase output, per-unit costs fall."
B)"My primary source of overhead cost is the cost of running the head office."
C)"If I need to, I can negotiate more overtime with my work force to meet unexpected orders."
D)"If I double the number of workers and trucks, I get only 80 percent more packages delivered."
E)None of the above

Question

Quizplus · Accepted Answer

Fixed cost refers to expenses that do not change regardless of the level of output or production. In this case, the cost of running the head office is an example of a fixed cost because it remains constant even if the production or output increases or decreases.

Which of the Following Quotes Best Illustrates the Idea of Fixed