Which of the following is a fixed cost in a manufacturing budget?

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Question: Which of the following is a fixed cost in a manufacturing budget?

Options:

Correct Answer: Factory rent

Solution:

Factory rent is a fixed cost as it does not change with the level of production.

Which of the following is a fixed cost in a manufacturing budget?

Which of the following is a fixed cost in a manufacturing budget?

Step 1: Understand what a fixed cost is. A fixed cost is an expense that does not change regardless of how much a company produces.
Step 2: Identify examples of fixed costs. Common examples include rent, salaries, and insurance.
Step 3: Look at the options given in the question. Determine which option is a cost that remains constant.
Step 4: Recognize that factory rent is a cost that stays the same every month, no matter how many products are made.
Step 5: Conclude that factory rent is a fixed cost in a manufacturing budget.

No concepts available.