Question

Expenses that change on a per-unit basis when production volume increases or decreases are known as ________.

A) variable costs
B) indirect costs
C) marketing and sales expenses
D) operating costs
E) manufacturing overhead costs

Answer 1

Variable costs are expenses that change in proportion to the production volume, such as labor and raw materials required for production.

Step-by-step explanation:

Expenses that change on a per-unit basis when production volume increases or decreases are known as variable costs. Variable costs are the costs of the variable inputs, such as labor and raw materials. They fluctuate directly with the volume of output. Producing a greater number of goods or providing more services typically requires an increase in variable inputs like more workers or more work hours, making these costs variable. In contrast, fixed costs remain constant regardless of output levels and do not vary with the level of production or services provided.