When preparing a cost sheet, which of the following is considered a fixed cost?

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Question: When preparing a cost sheet, which of the following is considered a fixed cost?

Options:

Correct Answer: Rent of factory

Solution:

Rent of the factory is considered a fixed cost as it does not vary with the level of production.

When preparing a cost sheet, which of the following is considered a fixed cost?

When preparing a cost sheet, which of the following is considered a fixed cost?

Step 1: Understand what a cost sheet is. A cost sheet is a document that lists all the costs associated with producing a product.
Step 2: Learn about fixed costs. Fixed costs are expenses that do not change regardless of how much you produce.
Step 3: Identify examples of fixed costs. Common examples include rent, salaries, and insurance.
Step 4: Focus on the rent of the factory. This is a fixed cost because it remains the same whether you produce a lot or a little.
Step 5: Conclude that rent of the factory is a fixed cost since it does not vary with production levels.

No concepts available.