Which is a correct example of variable cost?
Answer and explanation
Correct answer: Raw material expense that increases with production
A variable cost changes in relation to the level of production or sales. If more units are produced, more raw material is normally required, so the total raw-material expense increases. Therefore option A is correct. Rent may be fixed, a shop name is not a cost, and a one-time table purchase is generally a fixed or capital expenditure rather than a variable production cost.
Frequently asked questions
What is the correct answer to this question?
Raw material expense that increases with production
Why is this the correct answer?
A variable cost changes in relation to the level of production or sales. If more units are produced, more raw material is normally required, so the total raw-material expense increases. Therefore option A is correct. Rent may be fixed, a shop name is not a cost, and a one-time table purchase is generally a fixed or capital expenditure rather than a variable production cost.
Which subject and chapter does this question cover?
This is a Class 11 Business Studies question. Chapter: Business, Trade and Commerce.
