Variable costs:
A)change in direct relationship to the quantity of output produced.
B)are constant in the short-run regardless of the quantity of output produced.
C)are equal to the change in cost when one more unit of output is produced.
D)are subtracted from ﬁxed costs to compute the contribution margin.
E)form the basis that is used to determine the degree of operating leverage employed by a
ﬁrm)

Question

Quizplus · Accepted Answer

Variable costs are costs that change in direct proportion to the level of production. As output increases, variable costs increase, and as output decreases, variable costs decrease. This is because variable costs are directly tied to the inputs required to produce each unit of output, such as raw materials or direct labor.

Variable Costs