LO4: essential financial terms

Question 1

What are fixed costs?

Answer 1

are costs that are not directly related to the amount produced

Question 2

Can fix costs change and if they can how?

Answer 2

They can change, but any change is not caused by an increase or decrease in production.

Question 3

Examples of fixed costs? (3)

Answer 3

-rent/mortgage payments
-insurance
-salaries

Question 4

what are variable costs?

Answer 4

are costs that are directly related to the amount produce.

Question 5

can variable costs change and how?

Answer 5

they will increase if more is produce, but it will decrease if less is produced.

Question 6

examples?>

Answer 6

-raw materials
-produxction costs
-sales costs