Which of the following is an example of a fixed cost?

• Electricity used in production

• Salaries of permanent staff

• Raw materials for production

• Packaging for each product sold

Fixed costs are best described as:

• Costs that change based on production levels

• Costs that remain constant regardless of output

• Costs that are directly linked to the product

• Costs incurred only when production stops

An example of a variable cost is:

• Rent for factory premises

• Interest on a business loan

• Cost of raw materials

• Monthly insurance premiums

Which of the following would NOT be considered a variable cost?

• Wages for hourly workers

• Advertising costs

• Utility costs that increase with production

• Cost of manufacturing components

Direct costs are best defined as:

• Costs that cannot be traced back to a specific product

• Costs directly attributable to producing a specific product

• Costs incurred after production has finished

• Costs that are fixed regardless of production levels

An example of a direct cost for a furniture manufacturer would be:

• Salaries for administrative staff

• Wood used to produce chairs and tables

• Rent for the office building

• Electricity for the entire factory

Which of the following is an example of an indirect cost?

• Paint used in manufacturing bicycles

• Depreciation on factory equipment

• Labor costs for assembly workers

• Fabric used to produce clothing

Indirect costs are often described as:

• Costs not directly related to production but necessary for operations

• Costs that fluctuate with production levels

• Costs incurred during the sales process

• Costs directly attributable to individual products

A fixed cost can also be an indirect cost when:

• It relates to administrative expenses like office rent

• It fluctuates with production

• It is directly tied to product output

• It is used for buying raw materials

Which of the following is both a variable and direct cost?

• Factory rent

• Packaging per product sold

• Marketing expenses

• Salaries of managers