Increased Output and New Fixed Expenses

Steps:

• All existing costs are variable, so doubling output doubles these costs.
• Renting a workshop introduces a new fixed cost.
• Variable costs rise with production volume.
• Total costs increase from both higher variable expenses and added fixed rent.

Why C is correct:

• C (both fixed and variable costs) aligns with the definition of variable costs changing with output and fixed costs remaining constant but increasing here via new rent.

Why the others are wrong:

• A: Ignores variable costs rising with doubled output.
• B: Overlooks the new fixed rental cost.
• D: Both variable and fixed costs clearly increase.

Final answer: C