Which type of costs would include rent and salaries?

Which type of costs would include rent and salaries?

• A. Variable Costs
• B. Fixed Costs
• C. Break Even
• D. Cashflow Statement

Answer: (B)

The correct answer is fixed costs. Fixed costs are expenses that do not change regardless of the level of goods or services produced by a business. This means that expenses like rent and salaries remain constant over time, whether the business is producing a large quantity of products or very few. For instance, a company will still have to pay rent for its premises and salaries for its employees even if sales fluctuate. In contrast, variable costs change with the level of production. These might include costs for materials or utilities that increase as production ramps up. Break-even refers to the point at which total revenues equal total costs, and is more of a financial analysis point rather than a type of cost. Lastly, a cash flow statement is a financial document that tracks the flow of cash in and out of a business, rather than categorizing costs.

The correct answer is fixed costs. Fixed costs are expenses that do not change regardless of the level of goods or services produced by a business. This means that expenses like rent and salaries remain constant over time, whether the business is producing a large quantity of products or very few. For instance, a company will still have to pay rent for its premises and salaries for its employees even if sales fluctuate.

In contrast, variable costs change with the level of production. These might include costs for materials or utilities that increase as production ramps up. Break-even refers to the point at which total revenues equal total costs, and is more of a financial analysis point rather than a type of cost. Lastly, a cash flow statement is a financial document that tracks the flow of cash in and out of a business, rather than categorizing costs.