Use the following information to determine the cash fixed costs: Administrative expenses = $200,000; Marketing expenses = $180,000; Depreciation expenses = $100,000; and Interest expenses = $20,000.
A) $380,000
B) $400,000
C) $480,000
D) $500,000
E) $620,000

Question

Quizplus · Accepted Answer

Cash fixed costs include expenses that do not vary with production levels and are paid in cash. Depreciation is a non-cash expense, so it should be excluded. Therefore, cash fixed costs are Administrative expenses ($200,000) + Marketing expenses ($180,000) + Interest expenses ($20,000) = $400,000.

Use the Following Information to Determine the Cash Fixed Costs