Question

Iten
To improve productivity, a local bakery rents a machine that mixes, partitions, and then bakes dough for a variety of pastries. The
machine costs the business $2,500 per month to rent and operate, regardless of output. The cost of renting the machine is
classified as
(1 point)
Iten
Iten
Iten
O marginal cost
Iter
O a variable cost
O a fixed cost
O marginal revenue
3 PM
arsday

Answer 1

The cost of renting the machine will be classified as Fixed cost.

Let understand that Marginal Cost refer to the cost incurred as a result of an additional unit of input in production while the Marginal revenue refers to revenue earned as a result of an additional unit of a input in production.

• Fixed cost refers to expense paid for continuation of specific business activities by a company. These cost remain constant and an example is Monthly rent, Premises lease.

In conclusion, the cost of renting the machine will be classified as Fixed cost because it is being used for the company business activity.

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