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20 October, 18:53

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

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Answers (1)
  1. 20 October, 19:07
    0
    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.
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