Question

State the name of a business with which you are familiar. List 5 fixed costs and 5 variable costs that business deals with. State your opinion about whether this business has relatively high or low fixed costs.

Answer 1

I am familiar with the restaurant business.

Fixed costs are costs of the place, the equipment required, utensil and cutlery expenses, furniture in the restaurant and vehicles required for delivery.

Variable costs are cost of raw material, labour costs, utilities, wastage and transportation

This business has high variable costs. There is generally a very high wastage factor that has to be taken into account. Also the cost of running the business can be very high depending upon the location such as taxes to be paid.