Rent and administrative expenses are examples of?

A. average fixed costs
B. average variable costs
C. fixed costs
D. variable costs

Correct Answer:

Option C – fixed costs

Explanation

Examples of general and administrative expenses are:

• Accounting staff wages and benefits.
• Building rent.
• Consulting expenses.
• Corporate management wages and benefits (such as for the chief executive officer and support staff)
• Depreciation on office equipment.
• Insurance.
• Legal staff wages and benefits.
• Office supplies.

Fixed costs are those costs that must be incurred in fixed quantity regardless of the level of output produced.