Summing All of the Costs That Do NOT Change as Output

question 173

Multiple Choice

Summing all of the costs that do NOT change as output varies yields

• A) variable costs.
• B) fixed costs.
• C) implicit costs.
• D) explicit costs.

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Definitions:

Fixed Costs

Expenses that do not change with the volume of production or sales, such as rent, salaries, and insurance.

Variable Costs

Expenditures that adjust based on the quantity of production or the scale of sales.

Utility Rates

Charges imposed by utility companies for the use of services such as electricity, gas, water, and sewer.

Contribution Margin

The amount by which the sale of a product or service exceeds its variable costs, used to cover fixed costs and contribute to net income.