Question

Clausel Inc., a furniture manufacturing company, receives a bulk order from a multinational company for 150 office chairs. To complete the order on time, Clausel Inc. speeds up its production process by hiring additional labor and purchasing more supplies. In this scenario, the costs incurred by Clausel Inc. for hiring more labor and buying more supplies exemplify its _____.

Answer 1

a. variable costs

Step-by-step explanation:

Based on the scenario it can be said that the costs incurred by Clausel Inc. for hiring more labor and buying more supplies exemplify its variable costs. These are expenses that change depending on the production output that the company has. Since increased production is going to require more supplies and laborers to keep up with the output.