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Is Insurance premium for fire insurance on the factory ...

Customer Question

Is Insurance premium for fire insurance on the factory building a variable cost?
Submitted: 8 years ago.
Category: Finance
Expert:  Manal Elkhoshkhany replied 8 years ago.

Hello and welcome to Just Answer

No. Insurance Premiums are Fixed Costs. The definition of a variable cost is: A cost that is fixed on a per unit basis, but varies in total with the change in the level of activity. Definition of a Fixed Cost is: A cost that is Fixed in total, but varies on a per unit basis with changes in the level of activity. Now since insurance premiums are fixed no matter how much the factory produces, they are considered fixed costs.

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