Assignment Task: Different definitions of costs.
Fixed Costs - do not change Example - Rent of $500 every month is fixed. Variable Costs - do change - Electricity costs vary every month and are variable costs. Mixed costs - combination of fixed and variable costs - Rent a car for $50 per day and $1 per mile would be mixed cost because $50 is fixed and $1 per mile cost would vary depending on how many miles you drive. Explicit costs - costs where you pay out money - Pay $5 in cash for lunch is an explicit cost. Implicit costs - costs where you do not pay out money - Give up your time to go to school is an implicit cost. Depreciation is also an implicit cost.
Question 1: Use your lecture notes, Google, and your research skills to answer the following. Suppose you and your roommate have started a bagel delivery service on campus. List some of your fixed costs and describe why they are fixed. List some of your variable costs and describe why they are variable.
Question 2: Is rent a fixed or variable cost? What is your opinion? Click on the link to submit.
Question 3: What is CVP, also called break-even, analysis? This is not in your lecture notes so you may have to Google and use your Internet skills.