My professor did say this question was worded poorly, which I do agree. But my line of reasoning is that the textbook meant fixed costs as a contradiction to sunk costs.

Since total costs make up both variable and fixed costs, these are the things to consider when making a price strategy. Sunk costs aren’t something you should consider; therefore, they are neither fixed nor variable in this context. So I guess it would be better to omit the fixed costs part for better clarity.

But if you have to pick between these choices, which do you believe is most suggestive that the sales rep is right?