Which type of cost does a planner need to consider, as it represents the amount of money necessary to simply open the doors of the organization?
A) Hidden versus obvious
B) Direct versus indirect
C) Variable versus fixed
D) Recurring versus nonrecurring

Question

Quizplus · Accepted Answer

The type of cost that represents the amount of money necessary to simply open the doors of the organization is fixed cost. Fixed costs are costs that do not vary with the level of production output or sales. This includes costs such as rent, salaries, and insurance, which do not change in the short-term regardless of how much the organization produces or sells. Therefore, a planner needs to consider fixed costs when opening the doors of the organization. Choice C, variable versus fixed, best captures this concept.

Which Type of Cost Does a Planner Need to Consider