A copy machine rented for an office is an example of which type of cost?

• A. Direct cost
• B. Fixed cost
• C. Variable cost
• D. Opportunity cost

Answer: (B)

Verified step by step guidance

1. Understand the definition of each cost type: Direct cost refers to expenses directly tied to a specific product or service. Fixed cost remains constant regardless of production levels. Variable cost changes with production levels. Opportunity cost represents the value of the next best alternative foregone.
2. Analyze the nature of the copy machine rental: The rental fee is typically a fixed amount paid periodically, regardless of how much the machine is used.
3. Determine if the cost changes with usage: Since the rental fee does not vary based on the number of copies made, it does not qualify as a variable cost.
4. Evaluate if the cost is directly tied to a specific product or service: The copy machine rental is not directly attributable to a single product or service, so it is not a direct cost.
5. Conclude that the copy machine rental is a fixed cost because it remains constant over time and does not depend on production or usage levels.