QQuestionAccounting
QuestionAccounting
Explain whether each of these expenses of a textile mill is a fixed cost or a variable cost, and why:
(a) Repairs to a leaking roof
(b) Cotton
(c) Food for the mill's cafeteria
(d) Night security guard
(e) Electricity
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Answer
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Step 1I'll solve this problem by analyzing each expense and categorizing it as either a fixed or variable cost with a clear explanation.
Step 2: Understanding Cost Classifications
- Fixed costs: Expenses that remain constant regardless of production volume - Variable costs: Expenses that change in proportion to production volume
Final Answer
(a) Roof Repairs: Fixed Cost (b) Cotton: Variable Cost (c) Cafeteria Food: Semi-Variable Cost (d) Night Security Guard: Fixed Cost (e) Electricity: Variable Cost
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