Question

Although labor is typically viewed as a variable cost in the very short run, some labor costs may be fixed. Which of the following items represents an example of a fixed labor cost? a. An hourly employeeb. A temporary worker who is paid by the hourc. A salaried manager who has a three-year employment contractd. none of the above

Answer 1

Answer: C. A salaried manager who has a three-year employment contract

Explanation: Fixed costs are costs that remain the same for a long period of time, fixed costs do not vary easily they are the same over a long run, mostly constant through out the contract period or throughout the life of the business entity.

Variable costs are costs which vary from time to time, labor costs such as hourly payment for employees or worker they are paid according to the hours they put it.

the salaried manager receives the same salary over a long period of time which can be up to three years as the option clearly stated.