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.
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 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.
Which subject and chapter does this question cover?
This is a Class 11 Business Studies question. Chapter: Sources of Business Finance. Topic: Concept, nature and importance of business finance.
