Asked by Alicia Lankford on Jun 13, 2024
Verified
For a large firm that produces and sells automobiles, which of the following costs would be a variable cost?
A) The $20 million payment that the firm pays each year for accounting services
B) The cost of the steel that is used in producing automobiles
C) The rent that the firm pays for office space in a suburb of St.Louis
D) The cost of internet advertising incurred each year
Variable Cost
Costs that vary directly with the level of production or sales, such as raw materials and labor expenses.
Steel
An alloy of iron and carbon, and sometimes other elements, known for its high tensile strength and ability to be shaped into various forms.
- Comprehend the principles of fixed, variable, and total costs in manufacturing processes.
Verified Answer
SS
Sumia Sami1Jun 14, 2024
Final Answer :
B
Explanation :
The cost of the steel used in producing automobiles is a variable cost because it varies with the number of automobiles produced. The more cars the firm produces, the more steel it needs, making this cost directly proportional to the production level.
Learning Objectives
- Comprehend the principles of fixed, variable, and total costs in manufacturing processes.