Question

The term “variable costs” refers to ______.

Options

• All costs that are likely to respond to the amount of attention devoted to them by a specific manager.

• All costs associated with marketing, shipping, warehousing, and billing activities.

• All costs that do not change in total for a given period of time and relevant range but become progressively smaller on a per unit basis as volume increases.

• All manufacturing costs incurred to produce units of output.

Answer 1

The term "variable costs" refers to all costs that do not change in total for a given period of time and relevant range but become progressively smaller on a per unit basis as volume increases.

Explanation:

Variable costs are those that vary directly with the degree of production or output. This indicates that as more units are produced, total variable costs rise correspondingly, and as fewer units are produced, total variable costs fall. Variable costs include raw materials, direct labor costs, and other expenses that change according to output volume.