Rent and administrative expenses are examples of A. variable costs B. average fixed costs C. average variable…

Question

Rent and administrative expenses are examples of A. variable costs B. average fixed costs C. average variable costs D. fixed costs

ScanSolve AI Tutor · Accepted Answer

Rent and administrative expenses do not change with the level of output or sales. They are paid regardless of production volume.

Classify costs based on behavior.
Fixed costs remain constant in total, regardless of activity level.
Variable costs change in direct proportion to activity.
Apply to examples.
Rent: Paid as a lump sum monthly, independent of units produced.
Administrative expenses: Salaries or office costs, typically constant.
Match options.
A. Variable costs: Incorrect (change with output).
B. Average fixed costs: Incorrect (fixed costs per unit, not the costs themselves).
C. Average variable costs: Incorrect (variable costs per unit).
D. Fixed costs: Correct.

D. fixed costs

D

Rent and administrative expenses are examples of A. variable costs B. average fixed costs C. average variable costs D. fixed costs