Question

Everything Looks Like a Nail, Inc. is a manufacturing company that produces hammers. The company faces a number of different fixed and variable costs in the short run. Determine which of the costs are examples of fixed costs and which are examples of variable costs. Assume the company cannot easily adjust the amount of capital that it uses and that salaries are negotiated only once per year. Fixed costs

Answer 1

Examples of fixed cost are taxes, the rent of the building.

Examples of variable cost are materials to make hammers.

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: taxes, rental

In this case, salaries are fixed cost. Other examples are taxes, the rent of the building.

Variable cost are the one that change when we produce. So, some examples are materials to make hammers, operational expenses, energy, etc.