Question

Which of the following are examples of fixed costs? (Select three answers.)

Answer 1

Answer:

Explanation:

Fixed costs are the cost expected to remain constant over a period. These costs do not change regardless of the level of production. Fixed costs are unlike variable expenses that vary with production volume.

From the list provides fixed costs will include

1). A computer for recording customer and order information

The cost of the computer will remain the same throughout the financial period under review. Once the computer is bought, the firm is likely not to incur other costs apart from maintenance, which is captured in other accounts.

2). A monthly fee for a flea market booth

The monthly fee is most probably a constant fee though out the period. It is the equivalent of rent for the market booth. The fee is not dependent on the level of the output.

3). A radio ad

A radio ad is a form of advertisement. The cost will not change whether output increases or decreases.