Which is a correct example of fixed cost in business?
Answer and explanation
Correct answer: Monthly shop rent
A fixed cost generally remains unchanged in total over a relevant period even when the level of output or sales changes, although it may change after a new contract or capacity decision. Monthly shop rent is a common example. Packaging per item, raw materials linked to production, and delivery per customer usually vary with activity, so they are variable costs.
Frequently asked questions
What is the correct answer to this question?
Monthly shop rent
Why is this the correct answer?
A fixed cost generally remains unchanged in total over a relevant period even when the level of output or sales changes, although it may change after a new contract or capacity decision. Monthly shop rent is a common example. Packaging per item, raw materials linked to production, and delivery per customer usually vary with activity, so they are variable costs.
Which subject and chapter does this question cover?
This is a Class 11 Business Studies question. Chapter: MSME and Business Entrepreneurship.
