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Which of the following is not a Fixed Cost?

Correct Answer: Direct Materials

Explanation:

Direct Materials doesn't come under Fixed Cost because it vary with changes in the activity level of a business.


Fixed Cost :


A fixed cost is a cost that does not change over the short-term, even if a business experiences changes in its sales volume or other activity levels.


It is of some importance to understand the extent and nature of the fixed costs in a business, since a high fixed-cost level requires a business to maintain a high revenue level in order to avoid generating losses.


Examples of Fixed Cost are:


Insurance, Salaries, Rent, Property Taxes,...


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