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An example of a cost likely to have a fixed behavior pattern is:

a) production labor wages
b) electricity cost for packaging equipment
c) advertising cost
d) sales force commission

1 Answer

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Final answer:

Sales force commission is not an example of a fixed cost; rather, fixed costs are expenses that remain constant regardless of production levels, such as rent or machinery expenses. A sales commission often varies with the number of sales, which makes it a variable cost.

Step-by-step explanation:

An example of a cost with a fixed behavior pattern is not the sales force commission as it typically varies with sales volume. Instead, fixed costs such as rent, machinery, and equipment expenses do not change with the level of production. For instance, an internet company that provides medical advice may incur high fixed costs for setting up the website and buying computer space, which remain constant regardless of the number of visitors. On the other hand, variable costs, like the commission for a sales force, fluctuate with production or sales levels. It's important to distinguish between these costs to understand the financial dynamics of a business.

  • Rent: A fixed monthly payment regardless of output
  • Machinery: Purchase or lease of equipment needed for production
  • Website operation: Costs sustained for running a website after initial setup

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