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dangina [55]
3 years ago
8

Changes in the prices of key commodities can have a significant impact on a company's bottom line. Energy is an input into virtu

ally all types of production; corn is an input into the production of beef, chicken, high­fructose corn syrup, and ethanol (the gasoline substitute fuel). Which of the following correctly describes the cost of energy for a company?
A. The cost of energy for a company is only a fixed cost.
B. The cost of energy for a company can be both a fixed cost and a variable cost.
C. The cost of energy for a company is only a variable cost
Business
1 answer:
andrew11 [14]3 years ago
8 0

Answer:

B)The cost of energy for a company can be both a fixed cost and a variable cost.

Explanation:

Energy is a fixed cost because it is an utility that companies have to pay regardless of the level of production; they need energy to function.

Energy is a variable cost because energy is an input to production, and the amount of energy used (and hence its cost) can vary a lot depending on how much output is produced. In the question, ethanol is referenced, which is also a type of variable cost, because it is an energy source that depends on another input (corn), and its used as a substitue for gasoline.

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