Any cost that varies in proportion to a business activity is a
A)Fixed cost.
B)Variable cost.
C)Mixed cost.
D)Step cost.

Question

Quizplus · Accepted Answer

A variable cost is a cost that varies in proportion to changes in the volume or activity of a business. This means that as production increases, the cost of materials, for example, will also increase proportionally. Therefore, a variable cost is the best choice for this scenario. Fixed costs, on the other hand, remain constant regardless of the level of activity, such as rent or salaries. Mixed costs have both fixed and variable elements, while step costs change at certain intervals instead of gradually.

Any Cost That Varies in Proportion to a Business Activity