N deciding whether to add or delete a product, the insurance expense associated with the custom-built equipment used to produce the product is an cost. Assume the equipment will be sold if the company discontinues the product. Select one:
A. avoidable fixed
B. unavoidable fixed
C. unavoidable variable
D. avoidable variable

A. avoidable fixed.

Explanation:

Avoidable costs are expense which can be avoided if an activity is terminated. Avoidable fixed costs are flat rate overheads which a company can eliminate if a certain activity is not performed. When the custom-built equipment is sold out if the product is discontinued, then the insurance expense will not incur resulting in the expense being eliminated.

urban company reports the following information regarding its production cost: units produced 37,000 units direct labor $ 30 per unit direct materials $ 35 per unit variable overhead $ 237,000 in total fixed overhead $ 127,000 in total