Sonia opened a yoga studio where she teaches classes and sells yoga clothing. Fixed costs for Sonia's yoga studio include the cost of the (i)
Tank tops.
(ii)
Wages paid to the other yoga instructors.
(iii)
Lease on the studio space.(iv)
Insurance that the landlord requires Sonia to carry for the studio.
A)(i) only
B)(i) and (ii) only
C)(iii) and (iv) only
D)(i), (ii), (iii), and (iv)

Question

Quizplus · Accepted Answer

Fixed costs are costs that do not vary with the level of output or sales. In this case, only the costs of the lease on the studio space and the insurance that the landlord requires Sonia to carry are fixed costs. The cost of tank tops and wages paid to other yoga instructors could vary with the number of classes or sales. Thus, option C is the best choice.

Sonia Opened a Yoga Studio Where She Teaches Classes and Sells