ECONOMICS

Detailed explanation-1: -Variable costs 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. Wages paid to the factory labour is an example of the same.

Detailed explanation-2: -Answer and Explanation: It is true that total variable costs change in proportion to changes in the volume of activity. Variable costs include components or direct labor that are applied to making a product and can change depending on how busy the company is.

Detailed explanation-3: -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-4: -Variable costs change in proportion to the quantity of output. As production quantity increases, the cost increases; as production quantity decreases, so do the costs. Most accounting textbooks depict variable costs as varying directly with volume.

Detailed explanation-5: -Total variable cost is the aggregate amount of all variable costs associated with the cost of goods sold in a reporting period. It is a key component in the analysis of corporate profitability. The components of total variable cost are only those costs that vary in relation to production or sales volume.