FNSACC412 Prepare Operational Budgets - Flexible Budgets

Topic 7 - Activities

Question 21

Firm Z is a manufacturer of one product. If it produces 10,000 units per annum, production can remain in the one factory, which includes storage space for inventory. However, if it produces 20,000 units per annum, Firm Z will need to rent new premises for storage of inventory. The rent for the factory and storage space is classified as what type of cost?

1. Fixed cost
2. Semi-variable cost
3. Step-fixed cost
4. Variable cost

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