Which one of the following would be regarded as a variable cost for a firm? Select one: a. the monthly lease payment made on the firm's delivery vehicle b. The franchisor's fee that a restaurant must pay to a national restaurant chain c. payroll taxes that are paid on employee wages d. the interest payments made on loans
Which one of the following would be regarded as a variable cost for a firm?
Meaning of Variable Cost:
The term variable costs are those cost which changes or fluctuates, as the firm's production level increases or decreases, thus variable cost is directly related to the firm's production and output level.
Thus the variable costs are those, which change according to the output level.
Given Situations:
1.
- The monthly lease payment made on the firm's delivery vehicle:
Answer: This above situation will not come under the firm's variable cost because the monthly lease payment for the firm's delivery vehicle will remain fixed in every coming month, thus it will come under fixed cost.
2.
- The franchisor's fee that a restaurant must pay to a national restaurant chain:
Answer: In this situation, the franchisor's fee will remain fix in every next payment to the national restaurant chain, thus it will come under fixed cost.
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