A cost that changes with the level of activity is a:
A) variable cost.
B) fixed cost.
C) total cost.
D) mixed cost.

Question

Quizplus · Accepted Answer

A cost that changes with the level of activity is called a variable cost. It varies in direct proportion to the level of activity. As the level of activity increases, the variable cost increases, and as the level of activity decreases, the variable cost decreases. Examples of variable costs include labor costs, raw material costs, and sales commissions.

A Cost That Changes with the Level of Activity Is