Question

A toymaker is launching a new toy this summer. The toy company incurs a variety of different costs. The list below contains some of the fixed costs and variable costs that it incurs.

Indicate which of the costs below are fixed costs (check all that apply):

		The software needed to design the toy
		The plastic used to make the toys
		The insurance taken on the toy production plant
		The fee paid to a designer to design the look of the toy
		The paint used to decorate the toys
		The packaging materials used to box the individual toys
		The cost of the machines used to manufacture the toys
		The labor used to assemble each toy

Answer 1

The software needed to design the toy – It is a Fixed cost as it is incurred only once

The plastic used to make the toys – It is a variable cost as it will be used every time the product is manufactured

The insurance taken on the toy production plant - It is a Fixed cost as it is incurred on an annual basis

The fee paid to a designer to design the look of the toy - It is a Fixed cost as it is incurred only once

The paint used to decorate the toys - It is a variable cost as it will be used every time the product is manufactured

The packaging materials used to box the individual toys - It is a variable cost as it will be used every time the product is manufactured

The cost of the machines used to manufacture the toys - It is a Fixed cost as it is incurred only once

The labor used to assemble each toy - It is a variable cost as it will be used every time the product is manufactured