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 the fixed assets required to change the level of output.
D)are subtracted from fixed costs to compute the contribution margin.
E)are added to fixed costs on a per-unit basis to compute the contribution margin.

Question

Quizplus · Accepted Answer

Variable costs are costs that change in a direct relationship to the quantity of output produced. As more output is produced, variable costs increase and as less output is produced, variable costs decrease. This is in contrast to fixed costs which remain constant regardless of the quantity of output produced. Option B is incorrect as it describes fixed costs rather than variable costs. Option C is incorrect as it describes capital expenditures rather than variable costs. Option D is incorrect as it describes the calculation of contribution margin rather than variable costs. Option E is incorrect as it describes the calculation of total costs rather than variable costs.

Variable Costs