Which of the Following Would NOT Be Considered a Fixed

question 226

Multiple Choice

Which of the following would NOT be considered a fixed cost of production?

• A) wages paid to labor
• B) the opportunity cost of capital
• C) interest payments on a loan
• D) insurance payments on plant and equipment

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Definitions:

Freight Costs

Freight costs refers to the charges involved in transporting goods by land, sea, or air. This includes the expenses associated with moving merchandise from the point of origin to its destination.

F.O.B. Destination

A shipping term indicating that the seller bears the freight charges and retains ownership of the goods being shipped until they reach the buyer's location.

F.O.B. Shipping Point

Purchaser pays or is responsible for the shipping costs from seller’s shipping point to purchaser’s location.

Discount Period

The established period after a sale during which a customer can pay the invoice at a reduced rate, incentivizing quicker payments and enhancing cash flow.