Mike wants to set up a factory to manufacture roller skates.He plans to employ a hundred people in his factory.Mike's primary expenses include rent, utilities, insurance, administrative salaries (for executives and higher-level managers), and depreciation of the physical plant and equipment.The expenses for raw material and labour to make the skates constitute the:
A)standard costs.
B)variable costs.
C)rebate.
D)improvement value.
E)fixed costs.

Question

Quizplus · Accepted Answer

Raw material and labor costs are directly dependent on the production volume and hence qualify as variable costs.

Mike Wants to Set Up a Factory to Manufacture Roller