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A. Questions of 3 & 4 marks each1. Explain the concept of fixed cost with the help of a table and diagram. |
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Answer» In management accounting,fixed costsare defined asexpensesthat do not change as a function of the activity of a business, within the relevant period. For example, a retailer must pay rent and utility bills irrespective of sales.The expenses made for setting up the production plant are the fixed cost. It doesn’t change in the short time period and also doesn’t depend on the quantity of production. For e.g.: cost of machinery, building, managerial team etc. are the fixed cost. It is also known as overhead cost or supplementary cost. |
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