Question

David manages a Shoney's restaurant. He is considering staying open later in the evening. For David, the variable costs associated with staying open longer hours will include all of the following except

Answer 1

Answer:

Rent of the building will remain the same

Explanation:

The fixed costs will not change because fixed cost remains fixed for any level of activity whereas the variable cost changes with the increase in level of activity. As the activity level will change with additional hours work which will increase the variable costs only. So all variable costs will increase whereas fixed will remain fixed. The all the other options were variable costs except rent which is fixed cost. So rent will no change because of additional hours worked.