Question

Appliance Apps has the following costs associated with its production and sale of devices that allow appliances to receive commands from cell phones. Which of the following costs are fixed costs?

a) Variable Sales and Administration Expenses
b) Direct Material Cost per Unit
c) Fixed Manufacturing Overhead Cost per Month
d) Direct Labor Cost per Unit

Answer 1

The fixed manufacturing overhead cost per month is the fixed cost among the options provided for Appliance Apps. Fixed costs remain constant regardless of production levels, whereas other mentioned costs such as variable sales, direct materials, and direct labor are variable and change with production volume.

Step-by-step explanation:

In the context of Appliance Apps, which costs are fixed costs? Fixed costs are those that do not vary with the production level and remain constant regardless of the amount of goods or services produced. From the provided options, the fixed manufacturing overhead cost per month represents a fixed cost. This could include expenses like the rent of a factory, salaries of managerial staff, or depreciation of equipment, which are all incurred no matter how many units are produced.

Other costs like variable sales and administration expenses, direct material cost per unit, and direct labor cost per unit are not fixed costs. These tend to vary with the level of production. As production increases, these costs would increase proportionally, hence they are variable costs.

A concept related to costs is production technology, which refers to the combination of techniques, skills, knowledge, and machines used in the production of goods and services. It defines how inputs like labor, capital, and materials are converted into outputs.