Question

Marcella operates a small, but very successful art gallery. All but one of the following can be classified as a variable cost arising from the physical inputs Marcella required to operate her business. Which is it?a) physical space for the galleryb)wages paid to three part-time employeesc)accountants fees for preparing tax returnsd)costs of purchasing art work to sell in the gallery

Answer 1

Answer:

The correct answer is a) Physical space for the gallery.

Explanation:

Variable costs fluctuate according on the production of goods of a company, while fixed costs stay the same regardless of the production output. Reviewing all the options:

• Wages paid to three part-time employees vary depending on the amount of hours they work.

• Accountant's fees for preparing tax returns vary depending on the time spent preparing the records.
• The costs of purchasing art work to sell in the gallery vary depending on the amount of art purchased and its value.

That leaves us with option A. The physical space for the gallery. Buildings and rent are known to be a Fixed cost for companies because they stay the same regardless of the production output.