A cost that changes in total in proportion to changes in volume of activity is a(n) :

A) Differential cost.
B) Fixed cost.
C) Incremental cost.
D) Variable cost.
E) Product cost.

Variable Cost

Costs that vary in direct proportion to changes in a business’s level of activity or volume of output produced, such as materials and labor.

Differential Cost

The difference in cost between two alternative decisions or scenarios.

Incremental Cost

The additional cost associated with producing one more unit of a product.