Posted by **vdan** on Friday, November 16, 2007 at 7:44pm.

Item: Raw Materials (cost for hamburgers)

Total Annual Cost: 650

Item: Building Rent

Total Annual Cost: 9000

Identify which cost item above is fixed and variable and why

- accounting -
**Michael**, Friday, November 16, 2007 at 7:55pm
Variable costs change based on how much of a product you produce. For example, if you're in the straw business, plastic would be a variable cost. If you make 100 million straws, you use more plastic than if you make just 50 million.

Fixed costs don't ever change based on how much you produce. This would be stuff like insurance, overhead, and utilities.

That should put you in the right direction. If you wish, we can critique your thinking on the above problem.

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