For break-even analysis, which of the following is a fixed cost for a doughnut shop?
A)costs for purchasing flour and sugar
B)energy costs for ovens and heating
C)interest payments on loans
D)advertising costs

Question

Quizplus · Accepted Answer

Fixed costs are costs that do not vary with the level of sales or production. Interest payments on loans are a fixed cost that a doughnut shop would have to pay regardless of how many doughnuts they sell. Costs for purchasing flour and sugar (known as variable costs) would increase as the level of production increases, as would energy costs for ovens and heating. Advertising costs could be either fixed or variable, depending on the nature of the advertising (such as a monthly fee for a billboard or a cost per click for online ads).

For Break-Even Analysis, Which of the Following Is a Fixed