Ace the CLEP Marketing Test 2026 – Market Your Skills to Success!

Question: 1 / 400

Which of the following is an example of total fixed cost?

Packaging materials

Rent and insurance

Total fixed costs are expenses that do not change with the level of goods or services produced by a business. Rent and insurance are classic examples of fixed costs because they must be paid regardless of the company's production levels or sales volume. For instance, a company pays a specific amount for rent each month, and this expense will remain the same whether it produces a lot of goods or none at all.

On the other hand, packaging materials, sales commissions, and production labor costs vary directly with production levels or sales activity. Packaging materials are tied to the number of products being packaged, sales commissions fluctuate based on sales performance, and production labor costs can change with overtime or when more workers are needed based on demand. Thus, rent and insurance distinctly represent fixed costs in contrast to these variable costs.

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Sales commissions

Production labor costs

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