Final answer:
Assets such as production facilities, office equipment, and heavy machinery that last many years and represent long-term investment are called long-term or fixed assets. Fixed assets incur fixed costs, which remain consistent regardless of production levels, and these costs can vary significantly between different types of businesses.
Step-by-step explanation:
Production facilities, office equipment, and heavy machinery are assets that are expected to last many years and are called long-term or fixed assets. The correct answer to the question is option d. Fixed. Fixed assets are a crucial part of a company’s balance sheet and represent the long-term investment in the company’s future.
Examples of fixed costs associated with fixed assets include the rent on a factory, the cost of heavy machinery, and office equipment, among others. These costs are characterized by their consistency irrespective of the level of production. For example, once you sign the lease for a factory space, the rent doesn’t change regardless of your production levels until the lease expires.
Different businesses will have varying levels of fixed costs. A high-tech manufacturer may require an expensive factory, indicating high fixed costs, while a service-oriented business, such as a local moving company, may minimize fixed costs by renting equipment only as needed.