Which of the following is most likely to be a variable cost for a firm ?
Correct answer: B. The payroll taxes that are paid on employee wages.
- A. The franchiser's fee that a restaurant must pay to the national restaurant chain
- B. The payroll taxes that are paid on employee wages.
- C. The monthly rent on office space that it leased for a year
- D. The interest payments made on loans.
Explanation
Payroll taxes are tied to employee wages, so they increase or decrease as the firm's employment bill changes and are therefore variable costs. Rent, loan interest, and a fixed franchise fee are typically fixed over the relevant period.
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