Jodi Recently Went into Business Producing Widgets

question 84

Multiple Choice

Jodi recently went into business producing widgets.Which of the following would be a fixed cost for her firm? 1.labour costs of $1000 per month
2.raw material costs of $5000 per month
3.a one-year lease on a building of $12 000

• A)1 only
• B)2 only
• C)3 only
• D)1 and 2
• E)2 and 3

---

Definitions:

Variable Cost

Outlays that rise and fall with the quantity of production or sales activities, encompassing costs such as materials and labor.

Fixed Costs

Costs that do not change with the level of production or business activity, such as rent, salaries, and loan payments.

Estimated Sales Price

The anticipated amount for which a product or asset would sell in the current market.

Discounted Payback Period

The time it takes for the cash flows from an investment to equal the initial cost of the investment, accounting for the time value of money.