Question

Which of the following is most likely to be a fixed cost?

A. shipping charges
B. property insurance premiums
C. wages for unskilled labor
D. expenditures for raw materials

Answer 1

Property insurance premiums are most likely to be a fixed cost.

Step-by-step explanation:

Fixed costs are expenditures that do not change regardless of the level of production. One example of a fixed cost is property insurance premiums. These premiums remain the same regardless of the volume of products produced or sold. Shipping charges, on the other hand, would typically vary with the volume of goods shipped and are therefore considered a variable cost. Wages for unskilled labor can also vary depending on the number of laborers employed, making it a variable cost. Expenditures for raw materials are also likely to be variable as they would increase or decrease depending on the production volume.

Answer 2

Property insurance premiums are the most likely fixed cost.

Step-by-step explanation:

A fixed cost is an expenditure that does not change regardless of the level of production. It remains constant over a certain period of time. In the given options, the most likely fixed cost would be B. property insurance premiums. Property insurance premiums are a fixed cost because they remain the same regardless of the level of production or sales. Whether the business produces a lot or a little, the property insurance premiums will not change.