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)The cost of internet advertising incurred each year

Question

Quizplus · Accepted Answer

The cost of the steel used in producing automobiles is a variable cost because it varies with the number of automobiles produced. The more cars the firm produces, the more steel it needs, making this cost directly proportional to the production level.

For a Large Firm That Produces and Sells Automobiles, Which