Question

Which of the following types of costs best describe the monthly lease payment that a veterinary practice pays to its landlord?

1) Variable
2) Fixed
3) Direct
4) Indirect

Answer 1

The monthly lease payment for a veterinary practice is a fixed cost, as it remains constant regardless of production levels or business activity.

Step-by-step explanation:

The monthly lease payment that a veterinary practice pays to its landlord is best described as a fixed cost. Fixed costs are those expenses that do not change regardless of the level of production or business activity. Examples of fixed costs include the rent on a factory or retail space, like the lease for the veterinary clinic, the cost of machinery, research and development costs, and advertising expenses. These costs are not dependent on the number of patients seen or services provided by the veterinary practice each month. Hence, the fixed nature of the lease payment remains constant over the period of the lease agreement.