A cost that is proportional to the volume of activity is a:
A)Mixed cost.
B)Fixed cost.
C)Variable cost.
D)Volume cost.
E)Break-even cost.

Question

Quizplus · Accepted Answer

A cost that is proportional to the volume of activity is a variable cost. This means that as the activity level increases or decreases, the cost of producing that activity will also increase or decrease. Examples of variable costs include raw materials, direct labor, and sales commissions, among others.

A Cost That Is Proportional to the Volume of Activity