Monroe Manufacturing produces and sells a product with a price of $100/unit.The following data has been prepared for its estimated upper and lower levels of activity.

The fixed expenses for this company are

Question

Monroe Manufacturing produces and sells a product with a price of $100/unit.The following data has been prepared for its estimated upper and lower levels of activity.

The fixed expenses for this company are

Quizplus · Accepted Answer

Fixed expenses are expenses that do not vary with changes in the level of activity, and are typically associated with the general operation of a business. In this case, the fixed expenses listed in choice A (depreciation, office salaries, and advertising) are all general operational expenses that would not be affected by changes in the level of activity. Choices B and C include expenses that are directly tied to the production of the product, and would therefore vary with changes in activity. Choice D includes sales salaries, which would also vary with changes in activity. Therefore, A is the best choice for fixed expenses.

Monroe Manufacturing Produces and Sells a Product with a Price