Rent, heating and air-conditioning, interest, and executive salaries would all be examples of
A. standard costs
B. variable costs
C. fixed costs
D. independent costs
E. monopoly costs
Answer: (C) The basic difference between fixed and variable costs is that fixed costs do not change with the volume of output, while variable costs do. Rent, heating bills, air-conditioning costs, interest payments, and executive salaries are all expenses that do not change with the level of output. So, they are fixed costs and the correct answer is (C). There is no such thing as monopoly costs (E) or independent costs (D). They are also not standard costs (A) or variable costs (B).