Costs incurred only when production occurs are known as:
A)explicit costs.
B)fixed costs.
C)variable costs.
D)technological expenses.

Question

Quizplus · Accepted Answer

Variable costs vary with the level of production output and are incurred as a direct result of producing goods or services. Examples include raw materials and direct labor costs. Fixed costs, on the other hand, do not change with the level of production (e.g., rent, salaries of permanent staff). Explicit costs are direct payments made to others in the course of running a business, not specifically tied to production volume. Technological expenses could be either fixed or variable but are not specifically defined by their occurrence only when production occurs.

Costs Incurred Only When Production Occurs Are Known As