Question

If a company rents a warehouse, it must pay rent for the warehouse whether it is full of inventory or completely vacant. Other examples include executives' salaries, interest expenses, depreciation, and insurance expenses. As output is increased or decreased, these _______ costs remain unchanged.

Answer 1

As the output is increased or decreased, these (B) fixed costs remain unchanged.

What are fixed costs?

• Fixed costs, also known as indirect costs or overhead costs in accounting and economics, are corporate expenses that are independent of the volume of goods or services generated by the business.
• They are usually recurrent, such as monthly interest or rent.
• These expenses are frequently capital expenses.

Explanation -

1. Dependent refers to a variable that changes when other factors change.
2. Fixed cost refers to a cost that doesn't change when the number of goods produced increases or decreases.
3. Opportunity cost refers to the benefit that you would have received from the option that was not chosen.
4. Marginal cost refers to the change in the cost when you produce an additional unit.
5. According to this definition and as the statement refers to a cost that doesn't change.

Therefore, as the output is increased or decreased, these (B) fixed costs remain unchanged.

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Complete question:

If a company rents a warehouse, it must pay rent for the warehouse whether it is full of inventory or completely vacant. Other examples include executives' salaries, interest expenses, depreciation, and insurance expenses. As the output is increased or decreased, these _______ costs remain unchanged.

a. dependent

b. fixed

c. opportunity

d. marginal