There are two categories of variable costs: ________.
A) Gross costs and net variable costs
B) Net variable costs and cost of goods sold
C) Cost of goods sold and other variable costs
D) Gross variable costs and net costs

Question

Quizplus · Accepted Answer

The two categories of variable costs are cost of goods sold and other variable costs. Cost of goods sold includes the direct costs associated with producing a product, such as labor and materials, while other variable costs include expenses such as sales commissions and shipping costs that vary with changes in production or sales volume. Option A is incorrect as gross costs and net variable costs are not recognized categories of variable costs. Option B is incorrect as net variable costs and cost of goods sold are not two distinct categories - cost of goods sold is one of the two categories of variable costs. Option D is incorrect as gross variable costs and net costs are not recognized categories of variable costs.

There Are Two Categories of Variable Costs: ________