Question

Ethan is an operations unit manager for Morningstar Foods. So far in developing his monthly budget, he has identified the following costs: Overhead at $120,000; Packaging at $70,000; Advertising at $60,000; Salaries at $400,000; Food production at $90,000, and Distribution at $22,000. The fixed costs in this situation would be:__________.

Answer 1

=$580,000.00

Step-by-step explanation:

Fixed costs are expenses that do not change whether the production level increases or decreases. Fixed costs are not easily controlled as variables costs. In practice, many businesses will set their fixed costs at the beginning of a financial year. Fixed costs are also known as a period cost.

In this case, will fixed cost include the cost of overheads, advertising, and salaries

calculating fixed cost

=$120,000.00 +$60,000.00+$400,000.00

=$580,000.00