Variable costs:
A)include most personnel costs and depreciation on machinery.
B)are always indirect costs.
C)increase in total when the actual level of activity increases.
D)can always be traced directly to the cost object.

Question

Quizplus · Accepted Answer

Variable costs are those costs that vary with the level of activity. As the level of activity increases, the variable costs also increase. Therefore, option C is the correct answer. Option A is incorrect as depreciation on machinery is a fixed cost, not a variable cost. Option B is incorrect as variable costs can be either direct or indirect, depending on whether they can be directly traced to the cost object. Option D is incorrect as variable costs are not always traceable directly to the cost object, as is the case with indirect variable costs.

Variable Costs