Question

Which of the following expenses is not a fixed cost?

1) equipment leases
2) packaging costs
3) insurance
4) salary

Answer 1

Among the expenses listed, 2. packaging costs are not a fixed cost because they vary with the production level, unlike equipment leases, insurance, and salaries.

Step-by-step explanation:

When assessing various types of costs in a business, we categorize them into fixed and variable costs. Fixed costs are those that do not fluctuate with the level of production or sales. Examples of fixed costs include equipment leases, insurance, and salaries as they are typically consistent regardless of business activity levels.

On the other hand, packaging costs are a variable cost because they change directly with the volume of products being sold. The more products a company packages and sells, the higher the packaging costs will be. Therefore, in answer to the student's question, among the options given, packaging costs are not a fixed cost.