Question

Logan's Bike Shop is putting together cost information to build 25 new bicycles. The variable costs would include:

a) Bicycle tires
b) Depreciation on the air pump
c) Manager's wages
d) None of the above

Answer 1

The variable cost for Logan's Bike Shop in the production of 25 bicycles would include the cost of bicycle tires. Depreciation on the air pump and manager's wages are not variable costs as they are considered fixed costs.

Step-by-step explanation:

In regards to Logan's Bike Shop assembling cost information to build 25 new bicycles, the variable costs would include bicycle tires. Variable costs are expenses that vary directly with the level of output or production, such as the cost of raw materials. Bicycle tires are a direct material required for each bike and would vary depending on the number of bicycles being produced. Depreciation on the air pump is not a variable cost because depreciation is considered a fixed cost, which does not vary with the level of output. Manager's wages are typically a fixed cost since they do not usually change with the number of units produced.