Final answer:
Variable costs change with production volume, including expenses like labor and raw materials. Fixed costs, such as rent, remain constant regardless of production levels. Knowing the distinction is essential for effective business management. Thus, the option B is the correct answer.
Step-by-step explanation:
The costs that are influenced by volume and can change each month based on changes in volume are variable costs. Variable costs are expenses that fluctuate in direct proportion to the level of output or production within a company. These costs include the likes of raw materials and labor, which typically increase as production ramps up and decrease when production levels drop. In contrast, fixed costs, such as the rent on a factory, remain the same regardless of production levels.
Understanding the difference between variable and fixed costs is crucial for businesses, as it helps manage expenses and pricing strategies. The total costs a company incurs are the sum of its fixed plus variable costs. An increase in variable costs due to increased production requires careful management to maintain profitability.