Which of the following is not a category of fixed costs?

Question

Which of the following is not a category of fixed costs?

BlackTom AI · Accepted Answer

When evaluating fixed costs, we look for costs that remain unchanged in total as output changes in the short run. The options need to be assessed against this idea.
Option: capital
This is not a traditional fixed-cost category. Capital refers to long-term investments or capital expenditures (CapEx) and to capital itself as a resource, rather than an ongoing expense that stays fixed with production level. It represents funding for assets rather than a recurring cost class that fluctuates with output, so it is not treated as a fixed cost category.
Option: rent
Rent is classically a fixed cost because the payment is typically the same every period regardless of production volume, at least within a relevant range. It does not vary with how much is produced in the short term, so it clearly fits the fixed-cost concept.
Option: depreciation
Depreciation is a non-cash fixed cost in many budgeting and cost-structure analyses. It allocates the cost of tangible assets over their useful life and tends to be constant per period, not directly tied to output levels in the short term, so it is considered a fixed cost.
Option: advertising
Advertising can be tricky. In many contexts, advertising spend can vary with sales or marketing campaigns (variable), while some base or contractual advertising commitments are fixed. Because advertising is not inherently or exclusively a fixed-cost category and can behave variably, it is not universally categorized as a fixed cost in the same way rent or depreciation are.

GBUS4330W01 25 Fall GBUS 4330 Quiz 2 - Requires Respondus LockDown Browser

Which of the following is not a category of fixed costs?

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GBUS*4330*W01 25 Fall GBUS 4330 Quiz 2 - Requires Respondus LockDown Browser

Which of the following is not a category of fixed costs?

View Explanation

Log in for full answers

Similar Questions

Fixed operating costs include all EXCEPT:

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GBUS4330W01 25 Fall GBUS 4330 Quiz 2 - Requires Respondus LockDown Browser