Variable costs ________.
A) are always indirect costs
B) increase in total when the actual level of activity increases
C) include most personnel costs and depreciation on machinery
D) are never considered a part of prime cost

Question

Quizplus · Accepted Answer

Variable costs are costs that change or vary with the level of activity or production, meaning they increase in total when the actual level of activity increases. Option A is incorrect because variable costs can be direct or indirect costs. Option C is incorrect because personnel costs may also include fixed costs, and depreciation on machinery is an example of a fixed cost. Option D is incorrect because variable costs can be a part of prime cost, which includes direct materials, direct labor, and variable manufacturing overhead.

Variable Costs ________