A fixed cost may include all of the following except:
A)Rent for the warehouse.
B)Annual salary of the CEO.
C)Depreciation.
D)Sales commission expense.

Question

Quizplus · Accepted Answer

A fixed cost is a cost that remains the same regardless of the level of production or sales. Rent for the warehouse and depreciation are examples of fixed costs because they don't change with variations in sales or production volumes. The annual salary of the CEO may be a fixed cost if it remains the same year after year, but it could also be a variable cost if it is tied to the company's performance or other factors. Sales commission expense, on the other hand, is a variable cost because it is based on the sales volume and can change depending on how much the company sells. Therefore, sales commission expense is not a fixed cost.

A Fixed Cost May Include All of the Following Except