Which of the following is a fixed cost for a company that sells greeting cards online and mails the printed cards to customers?

a.

the paper and glue to make the cards

b.

hourly workers who assemble and ship the cards

c.

packaging and shipping costs

d.

a paper cutting machine

A paper cutting machine

Explanation:

In a company there are fixed costs and variable costs. Fixed costs are those costs that cannot be cut in the short term. Usually the fixed cost is related to the physical structure of the company, bill payment, machinery (such as a paper cutting machine) and rent. Variable cost is the cost that can be cut in the short term, such as inputs and labor. For example, if the financial situation deteriorates, the company may lay off employees, ie labor is a variable cost. However, the company cannot get rid of the rent or the machinery, unless it closes its doors. So these are fixed costs.

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