Answer :
A. Cost of automotive batteries: V (Variable)
B. Wages paid to employees who deliver parts to customers: V (Variable)
C. Cost of shelving for the showroom: F (Fixed)
D. Utilities: water, electricity, and heat: F (Fixed)
E. Freight paid to receive parts from the warehouse: V (Variable)
A. The cost of automotive batteries is likely a variable cost because it varies with the number of products sold. As more batteries are sold, the cost of batteries increases proportionately.
B. Wages paid to employees who deliver parts to customers are also variable costs. The number of employees needed for deliveries depends on the level of sales activity. As the number of deliveries increases, so does the cost of wages.
C. The cost of shelving for the showroom is a fixed cost. Once the shelving is installed, the cost remains constant regardless of the level of sales activity. It does not vary based on the number of products sold.
D. Utilities such as water, electricity, and heat are typically considered fixed costs. They do not directly vary with the number of products sold but are necessary for the operation of the store regardless of sales volume.
E. Freight paid to receive parts from the warehouse is a variable cost. The amount of freight expenses will increase as more parts are ordered and received from the warehouse. The cost varies based on the level of activity in purchasing and receiving inventory.
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