A characteristic of a variable cost is that the
A)total cost varies in proportion to changes in the level of activity.
B)cost per unit increases as activity increases.
C)total cost varies indirectly with the level of activity.
D)the total cost remains constant, regardless of the level of activity.

Question

Quizplus · Accepted Answer

A variable cost is a cost that varies in proportion to changes in the level of activity. This means that as the level of activity (production or sales) increases, the total cost of the variable cost also increases. For example, the cost of materials used to manufacture a product is a variable cost. If the level of production increases, the cost of materials also increases.

A Characteristic of a Variable Cost Is That the