Question

Which of the following are fixed costs?

a) Rent on a production facility
b) Net working capital
c) Cost of equipment
d) Inventory costs

Answer 1

Fixed costs include rent on a production facility, cost of equipment, and inventory costs. Net working capital is not a fixed cost.

Step-by-step explanation:

Fixed costs are expenditures that do not change regardless of the level of production. Examples of fixed costs include rent on a production facility, cost of equipment, and inventory costs. These costs remain the same whether a company produces a lot or a little. Net working capital, on the other hand, is a measure of a company's liquidity and is not a fixed cost as it can fluctuate based on the level of business activity.