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प्रश्न
Explain with an example the meaning of variable costs.
Explain variable cost with suitable examples.
What do you understand by variable cost? Explain with the help of an example.
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उत्तर
- Variable costs are those costs that vary in amount with changes in the level of output or activity.
- Such costs increase and decrease in the same proportion in which the level of output increases or decreases.
- Variable costs vary in total amount but remain constant per unit of production.
- The costs incurred on raw materials, power, fuel, and the and the wear and tear of machines are examples of variable costs.
- For example, when the level of output increases from 5,000 units to 6,000 units, the amount of variable costs increases from ₹ 25,000 to ₹ 30,000.
- In this case, the variable cost per unit remains unchanged at ₹ 5 (25,000 + 5,000 and 30,000 + 6,000).
- Thus, there is a linear relationship between the volume of production and total variable costs.
Notes
Students can refer to the provided solutions based on their preferred marks.
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संबंधित प्रश्न
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