Costs that are directly attributable to the production of a product or delivery of a service are referred to as ________.
A) fixed costs
B) variable costs
C) target costs
D) total costs
E) unit costs

Question

Quizplus · Accepted Answer

Variable costs are directly related to the production of a product or delivery of a service. They increase or decrease with the output level. Fixed costs, on the other hand, are not related to the production level but accrue as a result of owning and maintaining a physical plant, equipment, or other assets. Target costs are estimated costs that a company must achieve to sell a product at a specified price and still make a profit. Total costs are the sum of all fixed and variable costs incurred by a company. Unit costs are calculated by dividing the total cost by the number of units produced or services delivered.

Costs That Are Directly Attributable to the Production of a Product