Final answer:
The question relates to Stargaze Company's financial management of a short-term truck lease with monthly payments, similar to fixed costs such as rent in the Yoga Center example. Leasing can benefit cash flow but includes possible additional costs for excess use.
Step-by-step explanation:
The question posed involves a company named Stargaze which has entered into a short-term lease for a truck and is making lease payments of $800 at the end of each month.
Drawing parallels with the Yoga Center example, where a fixed cost of rent is incurred regardless of operation, we can analyze Stargaze's leasing arrangement as part of their fixed costs.
These costs are incurred even when no revenue is generated. In contrast, variable costs like hiring labor are incurred only when the company operates. The Yoga Center's scenarios depict how fixed costs lead to losses when revenue does not cover these costs.
Leasing is an alternative to purchasing and usually involves lower monthly payments, which can be beneficial for cash flow management.
However, there are trade-offs, such as potential extra charges for exceeding mileage limits, similar to what the explanation regarding the 10,000-mile limitation in vehicle leases illustrates.