The following are some of the costs of a clothing manufacturer. State which among them will you consider as fixed cost?

A Cost of cloth
B Piece wages paid to workers
C Depreciation on machines owing to time
D Cost of electricity for running machines

Correct Answer: Depreciation on machines owing to time

Depreciation on machines owing to time is considered as fixed cost. Depreciation is a fixed cost, because it recurs in the same amount per period throughout the useful life of an asset. Depreciation cannot be considered a variable cost, since it does not vary with activity volume. However, there is an exception.
Bissoy MCQ
#Commerce #Economics

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