Question

Only costs that would disappear over time if a segment disappeared should be treated as __________ fixed costs.

Answer 1

Fixed costs are the costs that do not change regardless of the level of production. If a segment disappears, the fixed costs associated with that segment would also disappear over time.

Step-by-step explanation:

Fixed costs are the costs that do not change regardless of the level of production. These costs are incurred before producing any output and include expenses like rent on a factory or retail space. If a segment disappears, the fixed costs associated with that segment would also disappear over time. Examples of fixed costs include lease payments and insurance premiums.