Which of the following is a fixed cost?

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Study for the Year 11 Business Studies Preliminary Exam. Use flashcards, multiple-choice questions, and detailed explanations for each topic. Prepare effectively for your exam and boost your confidence!

Multiple Choice

Which of the following is a fixed cost?

Explanation:
Fixed costs are expenses that stay the same regardless of how much is produced in the short term. They must be paid even if production is zero. Rent fits this because the business owes the same amount each period no matter how many units it makes. The other costs typically change as production changes: raw materials rise with more output, wages can vary with hours worked, and transportation costs often depend on how much is shipped. So rent is the fixed cost in this list.

Fixed costs are expenses that stay the same regardless of how much is produced in the short term. They must be paid even if production is zero. Rent fits this because the business owes the same amount each period no matter how many units it makes. The other costs typically change as production changes: raw materials rise with more output, wages can vary with hours worked, and transportation costs often depend on how much is shipped. So rent is the fixed cost in this list.

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