HHD Inc has determined that its profit-maximizing quantity is 10,000 units per year. HHD earns $12,000 in revenue from the sale of those donuts. HHD has two costs. First, he pays $16,000 in annual rental payments for its five-year lease on its store. Second HHD incurs an additional cost of $5,000 for ingredients. HHD's variable cost is equal to.

$5,000, since ingredient is a variable input

$21,000 as it is a long run situation

$16,000, since rental payments are variable inputs that are paid every month

there is no variable cost in the short run

$1,000, because the firm will be able to only sustain at this level of variable cost.