Car owners can incur a number of costs. Suppose that your parents are willing to pay for the fixed costs of your car, but you must pay the variable costs. On the chart below, identify which costs are fixed and which costs are variable. Cost description 1. Monthly car payment 2. Gasoline 3. Oil changes 4. Insurance 5. License plates (one-time cost) 6. Car registration (annual) 7. New tires 8. Toll road charges 9.Car wash Cost type

1. Monthly car payment ( fixed cost)

2. gasoline (variable cost)

3. oil changes (Variable cost)

4. insurance (fixed cost)

5. License plate (Fixed cost)

6. car registration (fixed cost)

7. New tires (variable cost)

8. toll road charges (variable cost)

9. car wash cost (variable cost)

Explanation:

First, you have to know that there are two main kinds of costs that a company or and individual can incur, and they are; fixed cost or variable cost.

Fixed cost:

A fixed cost remains the same, no matter the volume of output. In a company production cost, a fixed cost does not change no matter how many goods or services the company produces. Examples are rent, salaries, insurances, utilities etc. Even though a company does not make any production within a certain month, it will still have to pay the rent for its apartment and equipment, and the workers must be paid too. so the cost remains the same whether output increases or decreases. In our example, the fixed cost on the car is one that does not change no matter how much time the car is used within that month or period, and they include; monthly car payment, which must have a certain fixed amount during the first payment, insurance is fixed, license plates which is a one-time payment is fixed, car registration (annual) is also fixed, how the car was used or not used that year does not affect the annual registration.

variable cost:

A variable cost is one that changes as the volume of production or output change. Example if a company usually incurs a cost of $2 on leather for producing a pair of shoes and it usually produces 1000 pairs in a month, it means its monthly cost  for leather is $2000 dollars. If it produces 4000 pairs this month, the cost of production increases to $8000 for the month so it varies with production volume. In our example, the variable cost on the car are costs that change periodically with how the car is used; gasoline, oil changes, toll road charges (which depends overall on how many times the car is used on the road) and car wash cost are all variable costs.

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