Costs which increase in total amount in direct proportion to an increase in output are called variable costs.

Question

Quizplus · Accepted Answer

Variable costs are those costs which vary with the level of production or output. As the production output increases, the variable costs also increase in direct proportion to the increase in output. Examples of variable costs include raw materials, direct labor, and direct expenses related to production. Therefore, the statement is true.

Costs Which Increase in Total Amount in Direct Proportion to an Increase