What do we call costs that fluctuate based on production levels achieved?
A) fixed costs
B) overhead costs
C) variable costs
D) market-driven costs

Question

Quizplus · Accepted Answer

Variable costs are the costs that vary based on the level of production achieved. Examples of variable costs include direct materials, direct labor, and commission-based salaries for sales staff. In contrast, fixed costs and overhead costs typically do not fluctuate with production levels, but rather are set at a predetermined amount regardless of production levels. Market-driven costs are not directly related to production levels, but instead are affected by external market forces such as supply and demand.

What Do We Call Costs That Fluctuate Based on Production