Question

When Greenway,Inc.sells 48,000 units,its total fixed cost is $115,200.What is its total fixed cost when it sells 54,000 units?
A) $100,800
B) $115,200
C) $129,600
D) It cannot be determined from the information given.

Answer 1

Answer: B) $115,200

Explanation:

Fixed costs are by definition fixed which means that they do not change as a result of a change in production level. This means that where Greenway sells 48,000 units or 54,000 units or even 0 units, the company would still incur the same fixed cost of $115,200.

The costs that change as a result of production level change are called Variable costs.