Asked by Kelsee Katsanes on Jun 13, 2024
Verified
Martin Shores, Inc. is facing financial difficulties and has ceased production. Management realizes that the firm will still incur $15,000 of costs each month until such time as the firm is sold. This $15,000 represents the _____ costs of the firm's operations.
A) Total.
B) Fixed.
C) Variable.
D) Net.
E) Contribution.
Fixed Costs
Expenses that do not change with the level of production or sales over a short period, such as rent or salaries.
- Comprehend the influence of operating leverage on predicting risk.
Verified Answer
MG
Marissa GreenJun 18, 2024
Final Answer :
B
Explanation :
Fixed costs are those costs that do not vary with the level of production or sales. Since Martin Shores, Inc. will incur $15,000 of costs each month regardless of its production level (which has ceased), these costs are fixed.
Learning Objectives
- Comprehend the influence of operating leverage on predicting risk.
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