COST ACCOUNTING
BREAK EVEN POINT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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A cost which does vary with output or sales
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A cost which does not vary with output or sales
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A costs which must be paid by each company
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A cost which does not need to be paid by each company
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Detailed explanation-1: -A variable cost is a corporate expense that changes in proportion to how much a company produces or sells. Variable costs increase or decrease depending on a company’s production or sales volume-they rise as production increases and fall as production decreases.
Detailed explanation-2: -Variable cost is referred to as the type of cost that will show variations as per the changes in the levels of production. Depending on the volume of the production in a company, the variable cost increases or decreases.
Detailed explanation-3: -Wages paid to the factory labour are costs that are directly proportional to the level of production. If zero output is being produced then these costs do not have to be incurred. These costs vary with the level of output produced. Therefore, they are classified as variable costs.