For a large firm that produces and sells automobiles, which of the following costs would be a variable cost?
A)the $20 million payment that the firm pays each year for accounting services
B)the cost of the steel that is used in producing automobiles
C)the rent that the firm pays for office space in a suburb of St. Louis
D)All of the above are correct.

Question

Quizplus · Accepted Answer

Variable costs are expenses that change in proportion to the activity or production level of a business. The cost of steel used in producing automobiles will change based on the number of automobiles being produced, making it a variable cost. The other options, such as the accounting service payment and office rent, are fixed costs that remain constant regardless of production levels.

For a Large Firm That Produces and Sells Automobiles, Which