Which of the following costs is an example of a cost that remains the same in total as the number of units produced changes?
The cost that remains the same in total as the number of units produced changes is called a fixed cost. Fixed costs are incurred regardless of the level of production and do not change with changes in output or sales. Examples of fixed costs include rent, salaries, insurance, and annual subscriptions.
The cost that remains the same in total as the number of units produced changes is called a fixed cost. Fixed costs are expenses that do not fluctuate with changes in production or sales levels. They stay constant regardless of the quantity produced.
To determine which of the provided costs is an example of a fixed cost, you will need to review the options and identify the expenses that do not change with the number of units produced.
Here are a few examples of costs that could potentially be fixed costs:
1. Rent or lease payments for a production facility: This is a fixed cost because the amount paid for rent or lease remains the same regardless of the number of units produced.
2. Annual insurance premium: If the insurance premium remains the same regardless of the number of units produced, it can be classified as a fixed cost.
3. Salaries for administrative staff: If the salaries of administrative staff remain constant regardless of production levels, it can be considered a fixed cost.
By examining each cost option and determining if it remains constant irrespective of the number of units produced, you can identify the fixed cost in the provided list.