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5 Mr . Coltrane operates a norist Some of his monthly operating expenses are shown below. Monthly Expenses Building Rent. \( \qquad \) \( \$ 1,750 \) Utilities.. \( \qquad \) \( \$ 425 \) to \( \$ 495 \) Labor costs. \( \qquad \) \( \$ 850 \) to \( \$ 1,350 \) Vehicle costs. \( \qquad \) \( \$ 415 \) to \( \$ 625 \) Which expense appears to be a fixed expense? A Building rent C Labor costs B Utilities D Vehicle costs

Ask by Robbins Schofield. in the United States
Mar 10,2025

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Building rent is the fixed expense.

Solución

**Step 1: Identify Fixed and Variable Expenses** A fixed expense remains constant each month regardless of business activity, while a variable expense changes depending on usage or production. **Step 2: Analyze the Given Expenses** - **Building Rent:** \( \$1750 \) every month (constant). - **Utilities:** Varies between \( \$425 \) to \( \$495 \). - **Labor costs:** Varies between \( \$850 \) to \( \$1350 \). - **Vehicle costs:** Varies between \( \$415 \) to \( \$625 \). **Step 3: Determine the Fixed Expense** Since building rent is the only expense that does not vary month to month, it qualifies as the fixed expense. **Answer:** \( \text{A. Building rent} \)

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A Building rent Building rent is classified as a fixed expense because it remains constant each month, regardless of the business's operation levels. In Mr. Coltrane's case, he has to pay the same amount of $1,750 every month, making it a reliable figure in his budgeting and financial planning. On the other hand, expenses like utilities, labor costs, and vehicle costs can fluctuate each month based on usage, employee hours, or mileage, which means they are considered variable expenses. This distinction helps business owners like Mr. Coltrane manage their finances effectively by identifying which costs are predictable and which may need closer monitoring.

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