Which ONE of the following is most likely to bea variable cost?Direct laborSupervisor...

Which ONE of the following is most likely to be a variable cost?

Direct labor
Supervisor salary
Rent
Insurance

Expert Solution

Solution:
	Answer is 1st option Direct labor

Working Notes:
	Direct labor cost is the variable cost as it is incurred and changes wih the level of activities ,direct labor cost changes with change in direct labor hours used for production , hence it is most likely to be variable cost. Since direct labor cost change with changes in level of production.




Notes:	Variable cost is the cost which changes with level of activities.

	Supervisor salary is fixed cost as it does not changes with change in level of activities hence it cannot be most likely be a variable cost.


	Rent is also fixed cost which is fixed per month or per year it does not changes with level of activities hence it cannot be a variable cost.



	Insurance expense is also fixed cost which is fixed annual it does not changes with level of activities hence it cannot be a variable cost. Insurance expense generally annual cost hence it can not be variable cost.




/td>

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