The owner of Mega Motor Bikes is opening a new retail location. Which of the following is most likely to be a fixed cost for Mega Motor Bikes?
A)Retail personnel salaries
B)Advertising on Facebook
C)Building rent
D)Electricity
E)Transportation of sold bikes

Question

Quizplus · Accepted Answer

Building rent is a fixed cost because it does not vary with the number of bikes sold or the level of sales. It is a recurring cost that the company has to pay regardless of how many bikes they sell at the new retail location. Salaries and transportation costs are variable costs that depend on the level of sales or the number of bikes sold. Advertising on Facebook is also a variable cost because the company can choose to increase or decrease its advertising spending based on the level of sales or other factors. Electricity is a semi-variable cost because it may include fixed charges such as a connection fee, but the usage costs will vary depending on the level of sales and the amount of electricity consumed by the store.

The Owner of Mega Motor Bikes Is Opening a New