Which of the following would most likely be classified as a variable cost in breakeven analysis for a furniture manufacturer?
A) cost of lumber and upholstery
B) insurance on delivery truck
C) property taxes
D) office rent

Question

Quizplus · Accepted Answer

The cost of lumber and upholstery is a direct variable cost that increases as the level of production increases. This cost is directly proportional to the number of units produced, making it a variable cost in breakeven analysis. The other options, such as insurance, property taxes, and office rent, are fixed costs that do not change with the level of production and would be classified as fixed costs in breakeven analysis.

Which of the Following Would Most Likely Be Classified as a Variable