Which of the following expenses is a part of ‘fixed cost’ in production of surgical garmenst?

Correct option is D

The correct answer is (D) Fixed Salary

Information Booster:

In the production of surgical garments, fixed costs refer to expenses that remain constant regardless of the level of production output. These costs do not vary with the number of units produced.

Examples of Fixed Costs:

• Rent of Factory or Office Space: The cost of leasing the production facility is constant and does not depend on how many garments are produced.
• Salaries of Permanent Staff: Wages for permanent employees who are not directly involved in production (e.g., managers, supervisors) remain fixed.
• Depreciation of Machinery: The cost associated with the wear and tear of equipment is fixed over a period.
• Insurance Premiums: Payments for insurance policies remain the same, regardless of production levels.
• Property Taxes: Taxes on factory property are fixed expenses.

Non-Fixed Costs:

These are variable costs that change with the level of production, such as:

• Cost of raw materials (e.g., fabric, thread).
• Wages of workers paid on a per-unit basis.
• Utility costs like electricity or water, which increase with higher production.

Fixed costs in the production of surgical garments include expenses like rent, salaries of permanent staff, and depreciation of machinery.