Costs that change with the level of production are referred to as ________.
A) fixed costs
B) variable costs
C) target costs
D) total costs
E) overhead costs

Question

Quizplus · Accepted Answer

Variable costs are costs that vary with the level of production and are directly tied to the inputs or resources required to produce a good or service. Examples of variable costs include costs of raw materials, labor costs, and sales commissions. Fixed costs, on the other hand, remain constant regardless of the level of production, such as rent or salaries. Target costs are the desired costs for a product or service, while overhead costs are indirect costs that cannot be directly tied to the production of a specific product or service. Total costs represent the sum of all costs, both fixed and variable.

Costs That Change with the Level of Production Are Referred