Variable costs are best defined as:

Question

Quizplus · Accepted Answer

Variable costs are costs that change in proportion to the level of activity or output. As the level of output or activity increases, variable costs increase and as the level of output or activity decreases, variable costs decrease. Therefore, choice C is the best definition of variable costs. Choice A is incorrect because the number of employees may or may not be directly related to the level of activity. Choice B is incorrect because while variable costs may vary from period to period, this is not the best definition of variable costs. Choice D is incorrect because all costs, including variable costs, vary over time.

Variable Costs Are Best Defined As