The term "variable costs" refers to ............... 1. All costs that are likely to respond to the amount of attention devoted to them by a specific manager. 2. All costs associated with marketing, shipping, warehousing, and billing activities. 3. All costs that do not change in total for a given period of time and relevant range but become progressively smaller on a per unit basis as volume increases. 4. All manufacturing costs incurred to produce units of output.

Question

KnowledgeBoat · Accepted Answer

All manufacturing costs incurred to produce units of output.

Reason — Variable costs are those costs which vary in amount with changes in the level of output or activity. They increase or decrease in the same proportion as the volume of production. Among the given options, only option 4 relates to costs incurred for producing units of output (which inherently vary with the units produced). Option 1 describes controllable costs, option 2 describes selling and distribution costs, and option 3 describes fixed costs (which remain unchanged in total but become smaller per unit as volume rises).

Commercial Applications

Cost

Answer

Related Questions

Variable costs per unit decrease as the level of production increases.
True
False

Assertion (A): Indirect costs are always fixed costs.
Reason (R): Indirect costs are expenses that cannot be directly attributed to a specific cost object.
A is true but R is false
A is false but R is true
Both A and R are true and R explains A.
Both A and R are true but R does not explain A.

Total variable cost per unit increases ……………
When production grows
When demand decreases
Change in government rules
Change in availability of raw material