Fixed costs that continue to exist even after a product line is dropped are called

Question

Quizplus · Accepted Answer

Unavoidable fixed costs remain unchanged despite the changes in the level of production or sales. Even when a product line is dropped or discontinued, certain fixed costs such as rent, insurance, and salaries continue to exist. Hence, option B is the correct answer. Avoidable fixed costs, on the other hand, can be eliminated or reduced by discontinuing a product or a particular activity. Variable fixed costs do not exist as fixed costs are, by definition, a constant amount regardless of production or sales volume. Relevant fixed costs are those that impact decision-making and can vary depending on the decision being made.

Fixed Costs That Continue to Exist Even After a Product