Changes in the prices of key commodities can have a significant impact on a company's bottom line. Energy is an input into virtually all types of production; corn is an input into the production of beef, chicken, highfructose corn syrup, and ethanol (the gasoline substitute fuel). Which of the following correctly describes the cost of energy for a company?
A. The cost of energy for a company is only a fixed cost.
B. The cost of energy for a company can be both a fixed cost and a variable cost.
C. The cost of energy for a company is only a variable cost

Question

18-11-2019
Business

contestada

Changes in the prices of key commodities can have a significant impact on a company's bottom line. Energy is an input into virtually all types of production; corn is an input into the production of beef, chicken, highfructose corn syrup, and ethanol (the gasoline substitute fuel). Which of the following correctly describes the cost of energy for a company?
A. The cost of energy for a company is only a fixed cost.
B. The cost of energy for a company can be both a fixed cost and a variable cost.
C. The cost of energy for a company is only a variable cost

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sebastiansierraocm sebastiansierraocm · Answer 1 · 2019-11-21T01:43:39+01:00

Answer:

B)The cost of energy for a company can be both a fixed cost and a variable cost.

Explanation:

Energy is a fixed cost because it is an utility that companies have to pay regardless of the level of production; they need energy to function.

Energy is a variable cost because energy is an input to production, and the amount of energy used (and hence its cost) can vary a lot depending on how much output is produced. In the question, ethanol is referenced, which is also a type of variable cost, because it is an energy source that depends on another input (corn), and its used as a substitue for gasoline.