Question

Harry's Hotdogs is a small street vendor business owned by Harry Huggins. Harry is trying to get a better understanding of his costs by categorizing them as fixed or variable. Which ofthe following costs are most likely to be considered fixed costs?a.the cost of mustardb.the cost of hotdog bunsc.wages paid to workers who sell hot dogsd.the cost of bookkeeping services

Answer 1

Answer:

the cost of bookkeeping services

Explanation:

Fixed costs are those costs that are not dependent on the amount of good or services produced and hence does not change at all times. With an increase in the number of hotdogs produced, Harry must increase the number of mustard and hotdog buns he buys, which means the cost of these will increase. Also, an increase in the number of hotdogs would mean an increase in the number of workers who will sell the hotdogs and would mean an increase in wages, hence it is not a fixed cost. On the other hand, cost of bookkeeping has nothing to do with an increase or decrease in the amount of hotdog produced and hence it is a fixed cost if we go by the definition of fixed cost.