Question

An automobile manufacturing plant receives the various component parts for its vehicles, assembles the parts into automobiles and then paints them. Classify the followings as Fixed or Variable Cost?

a. Salary of the Supervisor of the Painting Department

b. Paint used on Finished Vehicles

C. Mortgage Payment on the loan taken out to purchase the manufacturing plant

d. Property taxes charged on the property that contains the plant

e. Transportation costs charged by a delivery firm to delivery parts to the plant from the outside firms where they're sourced

Answer 1

answer
	fixed costs :	costs that do not change in relation to production volume. that is fixed costs stays the same when production increases or decreases.
	variable costs :	costs that change in relation to production volume. that is variable costs increases when production increases and variable costs decreases when production decreases.
		classification
	a)	Fixed costs
	b)	Variable costs
	c)	Fixed costs
	d)	Fixed costs
	e)	Variable costs