Which of the following statements describes variable costs?
A) They are fixed in total throughout the relevant range of activity.
B) They decrease on a per unit basis as production volume increases.
C) They vary on a per unit basis but do not vary in total as production changes.
D) They are constant on a per unit basis but vary in total as production changes.

Question

Quizplus · Accepted Answer

Variable costs are constant per unit but vary in total with the level of production or activity. This means that the total variable cost increases as production increases and decreases as production decreases, but the cost per unit remains the same regardless of the level of production.

Which of the Following Statements Describes Variable Costs