Is the soft drink cost fixed or variable


Response to the following problem:

In the evenings, Dennis Owen works telling fortunes using his friend Joel Allman's booth at the city market. Mr. Allman pays the booth rental, so Mr. Owen has no rental cost. As a courtesy, Mr. Owen provides each customer a soft drink. The drinks cost him $0.50 per customer.

Required:

a. What is the soft drink cost both in total and per customer if the number of customers is 5, 10, 15, 20, or 25?

b. Is the soft drink cost fixed or variable?

c. Draw two graphs. On one, plot total soft drink cost for 5, 10, 15, 20, and 25 customers; on the other, plot soft drink cost per customer for 5, 10, 15, 20, and 25 customers.

d. Comment on the likelihood that Mr. Owen will incur a loss on this business venture.

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Cost Accounting: Is the soft drink cost fixed or variable
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