Questions:

Which of the following are likely to be fixed costs and which variable costs for a chocolate factory over the course of a month? Explain your choice.

(a) The cost of cocoa

(b) Business rates (local taxes).

(c) An advertising campaign for a new chocolate bar. ………………………………........

(d) The cost of electricity (paid quarterly) for running the mixing machines ……………..

(e) Overtime pay

(f) The basic minimum wage agreed with the union (workers must be given at least one month’s notice if they are to be laid off).

(g) Wear and tear on wrapping machines.

(h) Depreciation of machines due simply to their age.

(i) Interest on a mortgage for the factory: the rate of interest rises over the course of the month.

Summary:

This question discusses about the fixed costs and variable costs in a chocolate manufacturing company. Various ingredients and their costs are put forward.

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