Which is a correct example of fixed cost?
Answer and explanation
Correct answer: Monthly shop rent
A fixed cost remains broadly unchanged with the level of output or sales during a relevant short period, although it may change when capacity or agreements change. Monthly shop rent is a common example. Packaging, raw material, and delivery expenses listed in the other options vary with units, sales, or customers, so they are variable rather than fixed costs.
Frequently asked questions
What is the correct answer to this question?
Monthly shop rent
Why is this the correct answer?
A fixed cost remains broadly unchanged with the level of output or sales during a relevant short period, although it may change when capacity or agreements change. Monthly shop rent is a common example. Packaging, raw material, and delivery expenses listed in the other options vary with units, sales, or customers, so they are variable rather than fixed costs.
Which subject and chapter does this question cover?
This is a Class 11 Business Studies question. Chapter: Business, Trade and Commerce.
