Commercial Applications
Fixed cost is a cost which remains same at ……………
- All levels of output
- Even zero level of output
- Both (A) and (B)
- Neither (A) nor (B)
Answer
Both (A) and (B)
Reason — Fixed costs remain unchanged in total amount irrespective of the volume of output — at all levels of output and even at zero level of output, the firm continues to incur fixed costs like rent, insurance, salaries of permanent staff and depreciation of plant. This is what makes them "fixed" — they exist as long as the business exists, regardless of whether anything is being produced.
Related Questions
A cost that is easily traceable to a cost object is known as ……………
- Direct cost
- Indirect cost
- Variable cost
- Fixed cost
What is a defining feature of semi-variable (mixed) costs?
(1) They remain constant across various activity levels.
(2) They solely consist of variable components.
(3) They only apply to service industries.
(4) They include both fixed and variable elements.
- 1 & 2
- Only 4
- Only 1
- 3 & 4
Direct cost increases when ……………
- Sales price of product increases
- Cost of raw material increases
- Tax increases
- Subsidy increases
Cost means:
- Revenue paid for something
- Price paid for something
- To generate expenses
- Depreciation earned