Question

“A fixed cost is a cost that a business must pay whether it produces one product or a million. Regardless of output, the business must pay the same,” amount spent to purchase a ______ is the example of fixed cost.

Options

• Raw material

• Machinery

• Stationary

• None of these

Answer 1

“A fixed cost is a cost that a business must pay whether it produces one product or a million. Regardless of output, the business must pay the same,” amount spent to purchase a machinery is the example of fixed cost.

Explanation:

Machinery is a fixed (capital) cost, a one-time or time-based expense that does not change with output level. Raw materials and stationery vary with production, so they are variable (indirect), not fixed.