Asked by virendra kumar on Jul 09, 2024
Verified
A variable cost is a cost that
A) varies per unit at every level of activity.
B) occurs at various times during the year.
C) varies in total in proportion to changes in the level of activity.
D) may or may not be incurred depending on management's discretion.
Variable Cost
Expenses that change in proportion to the amount of goods produced or the volume of services provided.
- Comprehend the principles behind mixed, variable, and fixed costs, including their categorization and application within the realm of accounting.
- Understand the influence of activity levels on variable and fixed expenses.
Verified Answer
AM
Alexandra MundrickJul 15, 2024
Final Answer :
C
Explanation :
A variable cost is a cost that varies in total in proportion to changes in the level of activity. This means that as production or sales increase or decrease, variable costs will also increase or decrease accordingly. Variable costs are associated with the cost of materials, labor, and other inputs that directly vary with production or sales levels. Therefore, A) is partially correct, but it does not reflect the proportionality aspect of variable costs. B) and D) are incorrect as they do not accurately describe the nature of variable costs.
Learning Objectives
- Comprehend the principles behind mixed, variable, and fixed costs, including their categorization and application within the realm of accounting.
- Understand the influence of activity levels on variable and fixed expenses.
Related questions
The Relevant Range of Activity Is the Activity Level Where ...
The Fixed Cost Element of a Mixed Cost Is the ...
If the Activity Index Decreases Total Variable Costs Will Decrease ...
Changes in the Level of Activity Will Cause Unit Variable ...
Which of the Following Statements Is True Regarding Fixed and ...