Question

Parker Industries is a small company with a big name! Parker Industries is actually a one-person company that imports strands of LED lights from China and sells them through its website. Parker's only overhead is a storage unit for inventory that costs $125 a month and a $25 monthly fee for website hosting. Currently, Parker imports the lights for $.99 each (including inbound shipping) and sells them for $4.49. Parker also pays shipping expenses of $.50 per light strand. What is Parker's monthly fixed costs?

a.

$150

b.

$.99

c.

$1.49

d.

$125

Answer 1

Total fixed costs= $150

Step-by-step explanation:

Giving the following information:

Parker's only overhead is a storage unit for the inventory that costs $125 a month and a $25 monthly fee for website hosting.

A cost is categorized as fixed because it does not vary with production (in relevant ranges).

In this case, the only two cost that is fixed is the storage and website hosting.

Total fixed costs= 125 + 25= $150