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Which is the correct example of a fixed cost?

Answer and explanation

Correct answer: Monthly shop rent

A fixed cost generally remains unchanged within a relevant level of activity for a period, even if output changes. Monthly shop rent is a common example because the amount is usually payable regardless of the number of units sold. Raw material and packing vary with activity, while customer-specific discounts depend on sales terms. Therefore, option A is correct.

Related tags

Fixed CostCost ManagementFinancial LiteracyConceptNature And Importance Of Business FinanceConcept Nature And Importance Of Business FinanceSources Of Business FinanceBusiness StudiesClass 11 Mcq

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