149k views
1 vote
Which of the following is a fixed cost for an automobile manufacturing plant?

a. Administrative salaries
b. Electricity used by assembly-line machines
c. Sales commission
d. Windows for each car produced

User Enxtur
by
7.7k points

1 Answer

1 vote

Final answer:

Administrative salaries are the fixed cost for an automobile manufacturing plant. Fixed costs do not vary with the level of production, unlike variable costs which fluctuate based on production volumes.

Step-by-step explanation:

The question pertains to understanding the concept of fixed costs within an automobile manufacturing plant. Fixed costs are expenditures that do not change regardless of the level of production. These costs are associated with the fixed inputs, like capital expenses, that remain constant whether production levels are high or low.

Within the options provided, administrative salaries most closely represent a fixed cost. Administrative salaries are typically set amounts paid to staff regardless of the production volume. In contrast, electricity used by assembly-line machines, sales commission, and windows for each car are all variable costs, as they fluctuate with the level of production.

It is crucial for businesses to understand the balance between fixed and variable costs in order to manage budgets effectively and make informed financial decisions.

User Tamb
by
7.6k points