Question : Which total cost is highlighted in the given statement?
Statement: It does not vary directly with level of output like rent or insurance.
Option 1: Fixed cost
Option 2: Variable cost
Option 3: Semi variable cost
Option 4: None of the above
Answer (1)
14th Jan, 2024
Correct Answer: Fixed cost
Solution : Total cost includes three types of cost fixed costs, variable costs and semi variable costs. Fixed cost does not varies directly with level of output like rent or insurance. Variable cost varies directly with output like payment for raw material, wages, power,etc. Semi variable cost varies with output level but not indirect proportion like salary plus commission on sales.
Hence, option A is correct.
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