Whether the purchase cost of a machine is treated as fixed or variable depends heavily on the time horizon being considered.

Question

Quizplus · Accepted Answer

The cost of a machine can be considered fixed over the short term but may become variable over a longer time horizon. In the short term, the cost is typically a sunk cost and does not change based on the level of production. However, over the long term, the cost may vary depending on usage, maintenance, and repairs, making it a variable cost. Therefore, whether the purchase cost of a machine is treated as fixed or variable depends heavily on the time horizon being considered.

Whether the Purchase Cost of a Machine Is Treated as Fixed