Costs that are proportional to the amount of units produced, such as materials and labor, are
A) fixed costs
B) marginal revenue
C) sunk costs
D) cost drivers
E) variable costs

Question

Quizplus · Accepted Answer

Variable costs are costs that vary with the level of output, meaning they increase or decrease as the production quantity increases or decreases. Examples of variable costs include direct materials and direct labor. Therefore, option E is the correct answer.

Costs That Are Proportional to the Amount of Units Produced