Fixed charges vs. operating charges in plant economics Which item below is not included under fixed charges for a chemical plant?

Introduction / Context:
In plant cost accounting, distinguishing fixed charges from operating costs helps assess economics, pricing, and profitability. Fixed charges recur regardless of production rate and are tied to ownership and financing.

Given Data / Assumptions:

• Fixed charges are time-dependent and not directly a function of throughput.
• Operating costs typically vary with usage and production.

Concept / Approach:
Fixed charges commonly include interest, taxes, insurance, rent/leases, and depreciation. Repair and maintenance (R&M) depends on operating hours, wear, and utilization; it is treated as an operating (or semi-variable) expense rather than a fixed charge.

Step-by-Step Solution:
List fixed charges: interest, rent/lease, property tax, insurance, depreciation.Identify R&M as utilization-dependent, not strictly time-only.Therefore, R&M is not a fixed charge.

Verification / Alternative check:
Standard chemical engineering economics texts classify R&M within operating expenses alongside labor, utilities, and consumables.

Why Other Options Are Wrong:

• Interest, rent, taxes/insurance/depreciation are canonical fixed charges accounted for annually regardless of production.

Common Pitfalls:

• Lumping all yearly recurring costs into fixed charges without considering dependency on plant utilization.

Final Answer:
Repair and maintenance charges