<u>The cost are as follows:</u>
<u>rent, raw materials, production, utilities, shipping, insurance, </u>
<em>Answer</em>:
<u>Fixed cost> rent, insurance, utilities</u>
<u>Variable cost> raw materials, production cost, shipping cost</u>
Explanation:
Remember, it was mentioned that Fixed costs are costs that must be paid regardless of how many units are produced and sold; which implies that <em>they do not change so frequently.</em>
Thus, we would expect rent paid by Crystal soap to be fixed overtime, her insurance payments as well as utilities she pays for like power etc would also fall under fixed cost.
Variable costs, on the other hand, fluctuate directly with sales volume. Therefore, Crystal soap business would incur varying cost amount for raw materials, production cost, and their shipping cost.
