Question

Amul Food Factory in India makes ice cream and produces processed and condensed milk. In the factory, the firm's employees use raw milk and sugar. The firm runs on electricity and purchases raw milk every day. Large robotic assembly lines fill and package the ice cream containers. Large industrial freezers store the ice cream. Based on this scenario, can you identify the fixed costs for Amul Food Factory?
a) the cost of raw milk purchased from the farmersb) the cost of building the factory, purchasing the robotic assembly lines and industrial freezersc) the cost of the employees hired and the number of packages purchasedd) the cost of purchasing electricity, raw milk, and sugar

Answer 1

Answer:

Option B

Explanation:

In simple words, Fixed cost refers to  an expenditure which does not adjust due to a rise or reduction in the volume of products or services generated or distributed. Fixed costs include bills that tend to be incurred by a corporation, irrespective of any particular market operation.

Fixed expenditures may be overt or indirect expenditures that may also have an bearing on revenue at various points throughout the financial statements. Thus, from the above we can conclude that the correct option is B.