A Local Business College Has 600 Students and 60 Employees

A local business college has 600 students and 60 employees. In recent years, due to the increasing popularity of the programs, the classrooms and lecture theatres have been becoming increasingly crowded. Next year, the number of students is expected to increase to 700 students, requiring the employment an an extra 6 staff and delivery of some classes in the evenings. Student numbers are expected to increase to 1,000 within the next 5 years. The Board of Governers have decided to extend the current building in order to cope with this increase in numbers. The cost of this extension is expected to be €35m. This is an example of:

A) Variable costs being fixed and fixed costs being variable
B) Semi-variable or mixed costs
C) Step costs
D) Absorption costing