Rotonga Manufacturing Company leases a vehicle to deliver its finished products to customers. Which of the following terms correctly describes the monthly lease payments made on the delivery vehicle?

a. Direct Cost - Yes; Fixed Cost - Yes

b. Direct Cost - Yes; Fixed Cost - No

c. Direct Cost - No; Fixed Cost - Yes

d. Direct Cost - No; Fixed Cost - No

Question

Business

David Alvarez

11 August, 18:50

Rotonga Manufacturing Company leases a vehicle to deliver its finished products to customers. Which of the following terms correctly describes the monthly lease payments made on the delivery vehicle?

a. Direct Cost - Yes; Fixed Cost - Yes

b. Direct Cost - Yes; Fixed Cost - No

c. Direct Cost - No; Fixed Cost - Yes

d. Direct Cost - No; Fixed Cost - No

+2

Answers (1)

Know the Answer?

Sean Reeves · Answer 1

Direct cost - No because a direct cost can be trace.

Fixed cost - Yes because it has no relationship to volume.

Explanation: A direct cost is a price that can be directly tied to the production of specific goods or services. example of direct costs are direct labor, direct materials, commissions, piece rate wages, and manufacturing supplies. while fixed cost are expenses that do not change as a function of the activity of a business, within the relevant period. examples of fixed costs include rent, insurance premiums, or loan payments.