Cool Runnings operates a chain of frozen yogurt shops The co

Cool Runnings operates a chain of frozen yogurt shops. The company pays $5,000 of rent expense per month for each shop. The managers of each shop are paid a salary of $3,000 per month and all other employees are paid on an hourly basis. Relative to the number of shops, the cost of rent is which kind of cost?

Variable cost

Fixed cost

Mixed cost

Opportunity cost

Solution

A. Variable cost

A variable cost is a cost that varies in relation to either production volume or services provided.