An illustration of fixed costs Following on from Learning exercise 3.8, apart from the variable costs already discussed, Lambchops has the following costs, all of which are expected to remain fixed for the levels of production being contemplated:
• factory rent: $60000 per year
• administrative staff salaries: $150000 per year
• other administrative costs: $57500 per year
• administration-related utility costs: $30000 per year.
What are the total fixed costs for one year? The total fixed costs would be all of the costs listed above: $297500. Why are these fixed costs?
They are considered fixed costs because they are assumed not to change within the period of analysis for the amount of production being planned. Will they be fixed forever? They will not be fixed forever. Costs like rent and salaries will change across time. The costs are considered to be fixed for a particular period, which might be a year, and only for a particular range of activity, beyond which additional fixed costs might be incurred.
Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.
You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.Read more
Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.Read more
Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.Read more
Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.Read more
By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.Read more