A company is being created that will tutor high school students who are studying for college entrance exams. It could be set up in different ways. It expects to teach 100 classes a year.

Explain whether each decision would result in a fixed cost, a variable cost, step, or a semi-variable cost with regard to the number of classes it offers.

A. It hires 20 teachers as full-time employees, and agrees to pay them a certain amount per year. The teachers will teach up to six classes each.
If they teach less, they still get the same pay.
B. It makes agreements with 30 different people, and agrees to teach them a certain amount for each class they teach during the year. They are not full-time employees, and only get paid if they teach a course. The company does not promise them how many courses they will teach.
C. It hires five teachers as full-time employees, and agrees to pay them a certain amount per year. The teachers will teach up to six classes each.
If they teach less, they still get the same pay. Because the company expects to have more classes than these five teachers can handle, it also makes agreements with additional people, who will be paid only when they teach courses. These other people are not promised any particular number of classes to teach.
D. It buys a photocopier to make copies of materials for the classes, and records depreciation on the copier based on an expected useful life of five years.
E. It buys paper for the photocopier.
F. It provides textbooks to the students as part of the service. It buys the textbooks from an outside publisher as it needs them.