Minnie & Mickey Mouse are opening a cookie shop. They must purchase an oven for their business. What type of cost is the purchase of the oven?
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A. A variable cost
B. A fixed cost
C. An opportunity cost
D. A dependent cost
I chose D.
The correct answer is B. A fixed cost, because it is a one-time expense that remains the same regardless of the number of cookies produced or sold.
Oh, Mickey and Minnie opening a cookie shop? That sounds like a sweet setup! As for the type of cost, you chose D, dependent cost. Well, let me tell you this... the oven is not going to depend on anyone, it's going to be the one baking those delicious cookies! So, sorry to say, but that's not quite right. The correct answer is B. A fixed cost. The purchase of the oven is a one-time expense that doesn't change with the production or sales volume. Now, let's get baking and make those cookies magic!
The correct answer is B. A fixed cost.
The correct answer is B. A fixed cost.
A fixed cost is a cost that does not change with the level of production or sales. The purchase of an oven for a cookie shop would be considered a fixed cost because the expense of buying the oven remains the same regardless of how many cookies Minnie and Mickey Mouse produce or sell. This means that whether they make 100 cookies or 1000 cookies, the cost of the oven remains constant.
On the other hand, a variable cost is a cost that changes with the level of production or sales. For example, the cost of ingredients like flour and sugar would be considered variable costs because they would increase as Minnie and Mickey Mouse produce and sell more cookies.
An opportunity cost, option C, refers to the potential benefit that is given up when choosing one alternative over another. It is not directly related to the purchase of an oven.
A dependent cost, option D, doesn't accurately describe the purchase of an oven either. A dependent cost is a cost that is dependent on another factor or event. In this case, the purchase of the oven is not dependent on any specific factor or event.
So, the correct answer is B. A fixed cost.