Which of the following is a variable cost?
A) rent expense
B) salary of plant manager
C) direct labor costs
D) straight-line depreciation expense

Question

Quizplus · Accepted Answer

Direct labor costs are a variable cost because they vary based on the level of production. As production increases, more labor is required, and therefore the cost of labor increases. Rent expense (A) is a fixed cost because it remains constant regardless of the level of production. Salary of plant manager (B) is also a fixed cost because it is not directly tied to the level of production. Straight-line depreciation expense (D) is a non-cash expense and is also a fixed cost.

Which of the Following Is a Variable Cost