Suppose Bev's Bags makes two kinds of handbags-large and small.Bev rents an industrial space where she keeps the fabric,the industrial sewing machine,her measuring board and cutting shears,extra needles,thread and buttons,and labels.Bev can produce three bags an hour,regardless of the size of bag.Which of the following would be considered a fixed cost of this company?

Question

Quizplus · Accepted Answer

The rent that Bev pays for the industrial space is a fixed cost because it is a recurring expense that does not vary with the number of bags produced. The fabric and sewing thread are variable costs, as they are used up with each bag produced.

Suppose Bev's Bags Makes Two Kinds of Handbags-Large and Small