Question

Your company incurs a cost for factory rentfactory rent​, ​which, in the short​ run, is fixed. What happens to this cost in the long​ run? In the long​ run, the cost of factory rentfactory rent A. becomes a variable cost. B. becomes a nonmonetary opportunity cost. C. remains a fixed cost. D. becomes zero. E. becomes an accounting cost.

Answer 1

Answer:

A. becomes a variable cost

Explanation:

Fixed costs are the expenses that remain constant in a period. During the period under review, fixed costs do not change regardless of the level of output. Fixed costs are mostly made up of overheads such as rent , depreciation, and administrative salaries.

Fixed cost remains constant in a particular financial year. In the long run,  business budgets and projections tend to change, resulting in changes to the fixed cost. In other words, in the long run, fixed costs will change. Therefore, in the long run, all costs are variable expenses.