Academic book publishers hire editors, designers, and production and marketing managers who help prepare books for publication. Because these employees work on several books simultaneously, the number of people the company hires will not go up and down with the quantity of books the company publishes during any particular year. The salaries and benefits of people in these job categories will be included in ________.Group of answer choicesfixed cost and marginal cost but not variable costfixed cost but not variable cost and total costmarginal cost and total cost but not fixed costfixed cost and total cost but not variable cost
Question
Academic book publishers hire editors, designers, and production and marketing managers who help prepare books for publication. Because these employees work on several books simultaneously, the number of people the company hires will not go up and down with the quantity of books the company publishes during any particular year. The salaries and benefits of people in these job categories will be included in ________.Group of answer choicesfixed cost and marginal cost but not variable costfixed cost but not variable cost and total costmarginal cost and total cost but not fixed costfixed cost and total cost but not variable cost
Solution
The salaries and benefits of people in these job categories will be included in fixed cost and total cost but not variable cost.
Explanation:
Fixed costs are costs that do not change with the level of output. In this case, the salaries and benefits of the employees (editors, designers, and production and marketing managers) are fixed costs because they do not change with the number of books published.
Variable costs, on the other hand, are costs that change with the level of output. In this case, the cost of paper, ink, and other materials used in the production of the books would be variable costs because they would increase with the number of books published.
Total cost is the sum of fixed and variable costs. Therefore, the salaries and benefits of the employees would be included in the total cost.
However, marginal cost refers to the cost of producing one additional unit of a good. In this case, the salaries and benefits of the employees would not be included in the marginal cost because these costs do not change with the production of one additional book.
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