A Company Has Fixed Costs of $75,000 Per Month

question 26

Multiple Choice

A company has fixed costs of $75,000 per month.If sales double from 5,000 to 10,000
Units during the month,fixed costs will

• A)remain the same.
• B)double.
• C)be cut in half.
• D)increase slightly.

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Definitions:

Machine Hour Requirement

A measure often used in manufacturing to estimate the number of machine hours required to complete a job, task, or project.

Excess Capacity

A situation where a company can produce more goods than demanded, often leading to underutilized resources or a need for strategic adjustments.

Competitive Bidding

A procurement process where suppliers submit proposals or bids to win a contract, often leading to lower prices through competition.

Fixed Costs

Costs that do not change with the level of production or sales activity, such as rent, salaries, and insurance.