Question

In: Accounting

Which of the following is an example of a cost that is variable with respect to the number of units producer?


Which of the following is an example of a cost that is variable with respect to the number of units producer? 

  • Salaries of top marketing executives 

  • Rent on the corporate office building 

  • Rent on the factory building 

  • Direct materials used in products

Solutions

Expert Solution

Last option D is correct.Direct material used in products are variable cost with respect to the number of units produced.

Variable costs varies the level of production of output. i.e., final products.Here,direct material is considered as variable cost because without direct material ,final products can not be manufactured or produced. direct material cost and direct labor costs are the common example of variable cost.

Salaries of top management executives, rent on corporate office building and rent on factory building are fixed cost in nature and fixed costs do not vary with the level of production.

Fixed costs remain constant irrespective of level of production.

Note: level of production can be assumed as number of units produced.

ekkarill92 answered 2 years ago
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