John runs a sandwich shop in his local village and has 4 employees. Which of the following represents a variable cost to John? i) Insurance of the shop ii) Wages paid to his employees iii) Rent to the landlord iv) Gas due to heating

A variable cost is a cost to a business or individual which changes with respect to the amount of output whilst a fixed cost is one that will remain constant, irrespective of the amount of output by the individual or business.
As rent and insurance payments are invariable to John, that leaves us with wages to be payed to employees and gas costs due to heating which both vary on usage, making them our variable costs. E.g. using more gas for heating will result in greater gas bills.

GS
Answered by Gunchit S. Business Studies tutor

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