Entrepreneurship

What is a fixed cost?

• A fixed cost is a one-time payment for a service.
• A fixed cost is an expense that increases with sales.
• Fixed costs are simply the costs that stay the same regardless of how much of something is produced.

• A fixed cost varies with production levels.

Which of the following is an example of a fixed cost?

• Raw materials

• Monthly rent

• Paychecks

• Utility costs

How do fixed costs impact a company's break-even point?

• Fixed costs do not affect the break-even point.

• Higher fixed costs increase the break-even point.

• Lower fixed costs increase the break-even point.

• Fixed costs only affect the break-even point if sales decrease.

Total fixed costs =

• sum of all variable costs

• sum of all average costs

• sum of all fixed costs

What is a variable cost?

• Costs that are incurred only during the production process.
• Variable costs are ones that can change depending on how much something is used or produced.

• Costs that remain constant regardless of production levels.
• Expenses that are fixed and do not change with sales volume.

What happens to total fixed costs when production levels increase?

• Total fixed costs increase with production levels.

• Total fixed costs decrease with production levels.

• Total fixed costs remain constant regardless of production levels.

• Total fixed costs fluctuate randomly with production levels.

How can a company reduce its fixed costs?

• By increasing production levels.

• By negotiating lower rent or lease agreements.

• By increasing sales volume.

• By hiring more employees.

Which is an example of a variable cost?

• Rent

• Salaries

• Insurance

• Cost of raw materials

What is a total cost?

• Total cost is the sum of fixed and variable costs.
• Total cost excludes variable costs.
• Total cost is the average of all costs.
• Total cost is only the fixed costs.

Is rent an example of a fixed or variable cost?

• Fixed cost

• Variable cost