Zack Shields leases a manufacturing facility that produces computer monitors. Zack tries to keep production high, because his lease payments are $10,500 a month, regardless of whether he produces one computer monitor a month or 10,000. Zach's lease payment is a ________ cost.
A) variable
B) secondary
C) fixed
D) marginal
E) tangible

Question

Quizplus · Accepted Answer

A fixed cost is a cost that remains constant, regardless of the level of production or sales. In this scenario, Zack's lease payment remains the same every month, even if he does not produce any computer monitors or produces a large number of them. Therefore, his lease payment is a fixed cost.

Zack Shields Leases a Manufacturing Facility That Produces Computer Monitors