Which of the following is true of a variable cost?
A) A variable cost in total changes in direct proportion to changes in output within the relevant range.
B) A variable cost is a cost that is not linked to a company's output.
C) A variable cost in total remains constant regardless of the level of output.
D) A variable cost in total increases as output decreases and decreases as output increases.

Question

Quizplus · Accepted Answer

A variable cost is a cost that changes in direct proportion to changes in output within the relevant range. This means that as output increases, variable costs also increase, and as output decreases, variable costs decrease. This relationship allows for the calculation of a variable cost per unit, which remains constant regardless of the level of output.

Which of the Following Is True of a Variable Cost