Question

Is chemicals (fertiliser, pesticides) a fixed cost or variable cost

Answer 1

Chemicals such as fertilizers and pesticides are generally considered variable costs in agricultural production. This is because the amount utilized can fluctuate based on factors such as crop type, the size of the operation, soil conditions, and specific farming practices. Variable costs change with the level of output: as production increases or decreases, the quantity purchased and used can vary accordingly.

In contrast, fixed costs are expenses that do not change regardless of the level of production, such as land leases, equipment depreciation, and salaries for permanent staff.

In summary, fertilizers and pesticides are typically classified as variable costs.