Dizzy gives out a free T-shirt to every 100th customer entering the park.The cost of this T-shirt would best be described as a:

A) fixed cost
B) mixed cost
C) step-variable cost
D) true variable cost

Step-Variable Cost

Costs that change in identifiable steps with changes in activity, increasing with each step rather than continuously.

Fixed Cost

Costs that do not vary with the level of production or sales volume, such as rent, salaries, and insurance.

Mixed Cost

A cost that contains both variable and fixed cost components, changing in total with levels of activity but not proportionately.