Question

Which one of the following best describes a variable cost​?

A. One that is affected by the general level of inflation
B. One that does not change proportionately with output
C. One that is constant per unit of​ output, irrespective of the level of output
D. One that is affected by the time period

Answer 1

A variable cost changes with the level of output created by a company. It is directly proportional to production levels, with labor and raw materials as common examples. Therefore the correct answer is C. One that is constant per unit of​ output, irrespective of the level of output

Step-by-step explanation:

The best description of a variable cost is one that is constant per unit of​ output, irrespective of the level of output. Variable costs are the costs of the variable inputs like labor and raw materials, and they fluctuate in direct proportion to the output level. As production increases or decreases, variable costs align accordingly. For example, when a company produces more goods, it typically requires an increase in labor and raw materials, which raises the variable costs.