PRC-3 · Chapter 12 · Question 20 of 69
A business must pay Rs. 1 million every year for its corporate software licenses, regardless of whether the business produces 1,000 units or temporarily shuts down production entirely. This software license fee is a:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Fixed cost
Explanation
Fixed costs are expenses that remain totally unchanged regardless of the level of output produced. They must be paid even if production is zero.
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