Which of the Following Statements About Fixed Costs Is Correct

question 103

Multiple Choice

Which of the following statements about fixed costs is correct?

• A) Fixed costs are not opportunity costs.
• B) Fixed costs must be paid even if the firm's output is zero.
• C) Fixed costs are always the largest portion of total costs.
• D) none of the above

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Definitions:

Solvency Ratio

Financial metrics used to evaluate a company's ability to meet its long-term debt and other obligation by comparing its assets to its liabilities.

Profit Margin

A financial metric that measures the amount of net earnings a company makes as a proportion of its sales.

Return On Common Stockholders' Equity

A measure of the profitability of a corporation in terms of the returns generated on the equity investment of the common shareholders.

Net Sales

Net sales represent the revenue a company generates from its business activities, after subtracting returns, allowances for damaged goods, and discounts.