In CVP analysis, which of the following is considered a fixed cost?
Practice Questions
1 question
Q1
In CVP analysis, which of the following is considered a fixed cost?
Direct materials
Direct labor
Rent expense
Sales commissions
Rent expense is considered a fixed cost in CVP analysis.
Questions & Step-by-step Solutions
1 item
Q
Q: In CVP analysis, which of the following is considered a fixed cost?
Solution: Rent expense is considered a fixed cost in CVP analysis.
Steps: 5
Step 1: Understand what fixed costs are. Fixed costs are expenses that do not change with the level of production or sales. They remain constant regardless of how much you produce or sell.
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 fixed cost.
Step 4: Recognize that rent expense is a cost that does not change based on production levels. Therefore, it is a fixed cost.
Step 5: Conclude that in CVP analysis, rent expense is considered a fixed cost.
