Question

A cost that changes in proportion to changes in volume of activity is a(n): Multiple Choice Differential cost. Fixed cost. Incremental cost. Variable cost. Product cost.

Answer 1

Answer:

The correct answer is Variable Cost.

Explanation:

As its name implies, the variable cost is the one that undergoes constant changes as a consequence of the production process itself, represented in the behavior of demand. Its increase is directly related to the production of more raw material, which can happen at certain times. Otherwise, due to external conditions, decreases occur in order to serve the market effectively.

Answer 2

Answer:

Variable cost.

Explanation:

When there’s a cost that changes in the totality of proportion to the changes in volume of activity then that’s a "Variable cost".

This is due to the fact that Variable cost per unit is on a constant state, thus when we multiply per unit variable cost, it changes in line with the change in units (volume).

Hence the Variable cost is the correct answer.