Richard Hamilton has a fast - food franchise and must pay a franchise fee of $35000 plus 3% of gross sales. In terms of cost behavior, the total cost is a:

a) variable cost
b) fixed cost
c) step - fixed cost
d) mixed cost

e) A delicious cost.

But in all seriousness, the total cost in this scenario is a mixed cost. The $35,000 franchise fee is a fixed cost because it does not change with the level of sales. However, the 3% of gross sales is a variable cost because it varies depending on the level of sales. Therefore, the total cost includes both fixed and variable elements, making it a mixed cost.

To determine the cost behavior of the total cost in this scenario, we need to look at the components of the total cost.

The franchise fee of $35,000 is a fixed cost. It is a one-time payment that does not change with the level of sales.

The 3% of gross sales is a variable cost. It is a cost that varies directly with the level of sales. As the gross sales increase, the cost also increases in proportion.

Since the total cost comprises both a fixed cost (franchise fee) and a variable cost (3% of gross sales), the correct answer is d) mixed cost.