Final answer:
Variable costs, such as labor and raw materials, rise or fall with production levels and are generally traceable to the cost object, although traceability can vary depending on accounting practices and the complexity of processes.
Step-by-step explanation:
Variable costs refer to the expenses that change in direct proportion to the volume of output or production. These costs can include items such as labor, raw materials, and other inputs that vary with the level of production. Labor costs, being a major component of variable costs, are treated as such because producing more goods or services generally requires more workers or additional work hours.
In a business scenario, like a barbershop, as the shop hires more barbers to increase the number of haircuts, the variable costs change, reflecting the additional labor required. These costs increase or decrease with the output, as opposed to fixed costs like rent, which remains unchanged regardless of how much is produced.
Can variable costs always be traced directly to the cost object? Largely, variable costs can be traced directly since they are incurred for specific activities related to the production of a product or service. However, the degree of traceability may vary depending on the business's accounting practices and the complexity of production processes.