Dizzy Amusement Park is open from 8:00 am till midnight every day of the year. Dizzy charges its patrons a daily entrance fee of $30 per person which gives them unlimited access to all of the park's 35 rides.

Dizzy gives out a free T-shirt to every 100th customer entering the park. The cost of this T-shirt would best be described as a:

A. fixed cost

B. mixed cost

C. step-variable cost

D. true variable cost

Question

Business

Drew Williamson

23 March, 11:10

Dizzy Amusement Park is open from 8:00 am till midnight every day of the year. Dizzy charges its patrons a daily entrance fee of $30 per person which gives them unlimited access to all of the park's 35 rides.

Dizzy gives out a free T-shirt to every 100th customer entering the park. The cost of this T-shirt would best be described as a:

A. fixed cost

B. mixed cost

C. step-variable cost

D. true variable cost

+1

Answers (1)

Know the Answer?

Omar Barrera · Answer 1

Step Variable cost

Explanation:

This cost remains the same over a period of time or until certain threshold is attained. It is subjected to review periodically if the manager decides. While a true variable cost varies in direct proportion to production activities, step variable does not.

Another example of step variable cost is compensation given out to either employees when a set target is achieved.