Lincoln Incorporated observed that when 30,000 units were sold, a particular cost amounted to $90,000, or $3.00 per unit. When the sales volume increased by 20%, the cost also increased to $108,000(i.e., $3.00 per unit). The cost that Lincoln is studying can best be described as a:
A)variable cost.
B)fixed cost.
C)mixed cost.
D)discretionary fixed cost.
E)step-fixed cost.

Question

Quizplus · Accepted Answer

The cost is a variable cost because it changes in direct proportion to the change in sales volume, remaining constant on a per-unit basis.

Lincoln Incorporated Observed That When 30,000 Units Were Sold, a Particular