Question

Variable costs A. are fixed per unit and vary in total as production levels change. B. are fixed in total as production levels change. C. vary per unit of output as production levels change. D. decrease per unit as production volume increases.

Answer 1

Answer: Option A

Explanation: In simple words, Variable cost is that cost of the business that changes with level of production. Hourly wage rate of workers, electricity bill of factory are some of many examples of variable cost.

The electricity consumption is fixed per unit, but if the level of production rises the electricity bill also rises as more units will be consumed.

Hence, from the above we can conclude that the right option is A.