Question

Choose a real or made up example of a company, and describe at least three fixed costs the company has. (1-3 sentences. 1.5 points)

Answer 1

Answer:

Let us take ABC Company, a manufacturing company to be our example company in discussing the fixed costs. Fixed costs are costs that remain constant for a given period of time regardless of changes in volume. The ABC Company’s fix costs includes the rent, insurance on property, and depreciation on machinery and equipment.

The rent is a fixed cost because it has a fixed amount which is to be paid every month. And the insurance on property is a fixed costs since the amount of the insurance that the company pays every month is already fixed and cannot be changed. The depreciation on machinery and equipment is also a fixed costs because the amount of depreciation is already computed and allocated every year to be expended and recorded at fixed cost.