Question

Classify the following as fixed or variable costs:

a. Fuel Interest on company-issued bonds
b. Shipping charges
c. Payments for raw materials
d. Real estate taxes
e. Executive salaries
f. Insurance premiums
g. Wage payments
h. Depreciation and obsolescence charges
i. Sales taxes
j. Rental payments on leased office machinery

Answer 1

a. Fuel Interest on company-issued bonds FIXED

b. Shipping charges VARIABLE

c. Payments for raw materials VARIABLE

d. Real estate taxes FIXED

e. Executive salaries FIXED

f. Insurance premiums FIXED

g. Wage payments VARIABLE

h. Depreciation and obsolescence charges FIXED

i. Sales taxes VARIABLE

j. Rental payments on leased office machinery FIXED

Step-by-step explanation:

Fixed costs are the cost of an organization that don´t change with the amount of production. So , if the production is 0, this cost will exist anyway. For example: real estate taxes, rental