Question

Assume that you are an entrepreneur of a hotel what are the pics and variable costs to carried out in that business

Answer 1

Fixed costs are the costs that remain constant regardless of the amount of goods produced .

Under a hotel business, fixed costs to be carried out include:

• Monthly rent
• Salaries to be paid to workers
• License fees.
• Insurance premium.

Variable costs are costs that vary in relation to the quantity of output produced.

Under a hotel business, the variable costs to be carried out include:

• Utilities such as electricity and gas that increase with production capacity.
• Commissions from sales.
• Wages.
• Transportation and delivery costs.
• Packaging costs.