A cost that changes in proportion to changes in volume of activity is a(n):
A) Differential cost.
B) Fixed cost.
C) Incremental cost.
D) Variable cost.
E) Product cost.

Question

Quizplus · Accepted Answer

A cost that changes in proportion to changes in volume of activity is a variable cost. Variable costs are dependent on the level of production or sales, and can include expenses such as direct labor and materials. As production or sales increase, variable costs will also increase.

A Cost That Changes in Proportion to Changes in Volume