Question

Assume that the management of Dairy Deli wants to expand operations. To help evaluate the risks involved in opening an additional store, the company president wants to know the amount of fixed cost a new store will likely incur. Management uses the regression method to analyze the company's mixed costs. In terms of interpreting the results:

Answer 1

Fixed costs are the costs of the fixed inputs, such as capital or rent, that do not change regardless of the level of production. They can take many forms and vary depending on the specific line of business.

Step-by-step explanation:

Fixed costs are the costs of the fixed inputs, such as capital or rent, that do not change regardless of the level of production. For example, the rent on a factory or retail space remains the same whether the business produces a lot or a little. This is because fixed inputs do not change in the short run. Fixed costs can take many forms, such as the cost of machinery, equipment, research and development, or advertising. The amount of fixed costs varies depending on the specific line of business.