Which one of the following statements related to variable costs is correct?
A) Variable costs fluctuate over the long-term but remain constant over the short-term.
B) An increase in the variable cost per unit increases the contribution margin.
C) Variable costs change only when the quantity is varied by at least five percent.
D) When production is halted, the variable costs of a project equal zero.
E) The variable cost per unit is equal to the marginal cost at any level of output.

Question

Quizplus · Accepted Answer

Variable costs are directly tied to the level of production or activity. Therefore, when production is halted, there are no activities that incur variable costs, making them equal to zero.

Which One of the Following Statements Related to Variable Costs