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Question
______ cost is activity-based. It increases with increase in output.
Options
Fixed
Variable
Semi-variable
Direct
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Solution
Variable cost is activity-based. It increases with increase in output.
Explanation:
Variable costs change with the level of activity because total variable cost rises as output increases (e.g., raw materials). They are activity‑based and vary in proportion to production, unlike fixed costs, which remain constant.
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