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Question
Variable cost is a cost that ______.
Options
Changes with the level of output.
Remains same at all levels of output.
Either changes with the level of output or remains same at all levels of output.
None of these.
Solution
Variable cost is a cost that changes with the level of output.
Explanation:
Variable expenses are directly related to the degree of production or output. Variable costs rise with increased production and fall with decreased production. Variable costs include raw supplies, direct labour costs, and production-related utility charges.
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