Question

Everything Looks Like a Nail, Inc. is a manufacturing company that produces hammers. The company faces a number of different fixed and variable costs in the short run. Determine which of the costs are examples of fixed costs and which are examples of variable costs. Assume the company cannot easily adjust the amount of capital that it uses and that salaries are negotiated only once per year.Fixed costsVariable costsa. interest rate on current debtb. regulatory compliance costsc. annual salaries of top managementd. cost of metal used in manufacturingf. cost of wood used in manufacturingg. postage and packaging costsh. lease on buildingi. industrial equipment costs

Answer 1

-Regulatory compliance costs FIXED COST

-Salaries of top management and key personnel FIXED COST

-Cost of metal used in manufacturing VARIABLE COST

-Cost of wood used in manufacturing VARIABLE COST

-Mortgage payments FIXED COST

-Industrial equipment costs FIXED COST

-Interest on debt FIXED COST

-Postage and packaging costs VARIABLE COST