Which is the most correct example of variable cost?
Answer and explanation
Correct answer: Raw material used for each unit produced
A variable cost changes as the quantity produced or sold changes. If an enterprise makes more units, it generally requires more raw material, so the total raw-material cost rises with output. Fixed rent, a fixed salary, and a registration fee do not normally change directly with each unit produced. Therefore the per-unit raw material cost is the best example.
Frequently asked questions
What is the correct answer to this question?
Raw material used for each unit produced
Why is this the correct answer?
A variable cost changes as the quantity produced or sold changes. If an enterprise makes more units, it generally requires more raw material, so the total raw-material cost rises with output. Fixed rent, a fixed salary, and a registration fee do not normally change directly with each unit produced. Therefore the per-unit raw material cost is the best example.
Which subject and chapter does this question cover?
This is a Class 11 Business Studies question. Chapter: Business, Trade and Commerce. Topic: Business Risk.
