The following are some Costs incurred by a Clothing manufacturer. State which among them will be considered as Fixed Cost.

Cost of Cloth

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Piece Wages paid to Workers

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Depreciation on Machines owing to time

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Cost of Electricity for running machines.

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Solution

The correct option is C Depreciation on Machines owing to time
Fixed costs are the costs which are not related with the level of production whereas variable costs are directly related with the level of production. Here the depreciation charged on machinery remains same for years until and unless additions to machinery are made.

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