Variable costs change as the quantity of output changes. They are not zero when production is zero because there may still be variable costs associated with the production process even if no output is being produced. Direct labor and raw materials are examples of variable costs. Therefore, all of the choices are correct.

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Variable Costs

Question 38

Multiple Choice

Variable costs:

A) change as the quantity of output changes.
B) are zero when production is zero.
C) are exemplified by direct labor and raw materials.
D) All of the above.
E) None of the above.

Correct Answer: