In the described startup cost scenario, which item is a one-time startup cost?

In the described startup cost scenario, which item is a one-time startup cost?

• A. The monthly lease payment of $4,000
• B. The one-time licensing fee of $1,000
• C. The monthly material expenses of $15,000
• D. The 10% contingency

Answer: (B)

One-time startup costs are the upfront payments you make to get the business running, and they don’t repeat in regular operations. The licensing fee fits this since it’s paid once to obtain the right to operate or to access essential tools, and you don’t keep paying it every month. In contrast, the monthly lease payment is a recurring expense that happens every month, and monthly material expenses repeat as you continue to buy inputs. A contingency is a budget reserve to handle unexpected costs and isn’t a regular payment you make on a schedule. So the licensing fee is the one-time startup cost.

One-time startup costs are the upfront payments you make to get the business running, and they don’t repeat in regular operations. The licensing fee fits this since it’s paid once to obtain the right to operate or to access essential tools, and you don’t keep paying it every month. In contrast, the monthly lease payment is a recurring expense that happens every month, and monthly material expenses repeat as you continue to buy inputs. A contingency is a budget reserve to handle unexpected costs and isn’t a regular payment you make on a schedule. So the licensing fee is the one-time startup cost.