Suppose Sam's Shoe Co.makes one kind of shoe.An example of a variable cost for this company would be:
A)a sewing machine.
B)the leather needed to make the shoes.
C)the lease to the factory building.
D)All of these are examples of variable costs.

Question

Quizplus · Accepted Answer

A variable cost is a cost that changes in relation to the level of production or sales activity. The cost of the leather needed to make the shoes is directly related to the number of shoes being produced, so it is an example of a variable cost. The sewing machine and the lease to the factory building are fixed costs as they do not vary with production levels.