Which of the following costs are most likely to be classified as fixed?
A) Property taxes
B) Shipping costs
C) Sales commissions
D) Direct labor
E) Direct materials

Question

Quizplus · Accepted Answer

Fixed costs are costs that do not vary with changes in the level of production, and property taxes are a prime example of such a cost. Regardless of how much a company produces, its property taxes will remain constant. Shipping costs (B) and sales commissions (C) are more likely to vary with the amount produced or sold, and are therefore classified as variable costs. Direct labor (D) and direct materials (E) are also variable costs, as they directly relate to the level of production.

Which of the Following Costs Are Most Likely to Be